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Difficulty: EasyRetirement and Death of a Partner

Musa, Emeka, and Audu are partners in a firm sharing profits and losses equally. Upon Audu's death, his capital account balance stands at ₦45,000\text{₦}45,000. The revaluation of assets resulted in a profit where Audu's share is ₦5,000\text{₦}5,000, and his share of goodwill is valued at ₦10,000\text{₦}10,000. What is the total amount payable to Audu's executor?

Answer: 60000 ₦

Answer

The total amount payable to Audu's executor is ₦60,000\text{₦}60,000.
The total amount due to the deceased partner's executor is calculated by adding all credit adjustments (revaluation profit share and goodwill share) to the partner's opening capital balance: ₦45,000+₦5,000+₦10,000=₦60,000\text{₦}45,000 + \text{₦}5,000 + \text{₦}10,000 = \text{₦}60,000.

Step-by-Step Solution

1
Add the deceased partner's initial capital balance, share of revaluation profit, and share of goodwill.
₦45,000+₦5,000+₦10,000=₦60,000\text{₦}45,000 + \text{₦}5,000 + \text{₦}10,000 = \text{₦}60,000
When a partner dies, their capital account is credited with their balance of capital, share of asset revaluation profits, and share of goodwill before transferring the total amount to the executor's account.

Key Concept

Deceased Partner Settlement
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Topics

Retirement and Death of a Partner

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