A, B and C were partners sharing profits, and losses in the ratio of 2:2:1. C died on 1st July, 2023 on which date the capitals of A, B and C after all necessary adjustments stood at ₹74,000, ₹63,750 and ₹42,250 respectively. A and B continued to carry on the business for six months without settling the accounts of C. During the period of six months from 1-7-2023, a profit of ₹20,500 is earned using the firm’s property. State which of the two options available u/s 37 of the Indian Partnership Act, 1932 should be exercised by executors of C and why?. 

Marks-3, CBSE: 2024-25/Sample/Q-18*