Assume that a new partner was introduced at the commencement of the 1984 accounting year with profits subsequently shared equally by all partners and no salaries or guaranteed shares payable. 1984 profits were provisionally fixed at

£42000 but further examination revealed that the closing stock for 1983 had been understated by £6000. Adjustment for this error would require the following adjustment to Brown's share of profits for the four years:

(a) £500 reduction;

(b) £ 1250 increase;

(c) £1500 increase;

(d) £1000 reduction.

Problems