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प्रश्न
How will you deal with the accumulated profit and losses and reserves on the admission of a new partner?
उत्तर
When a new partner is admitted in a partnership firm, then all past accumulated profits or losses and reserves are distributed among all the old partners in their old profit sharing ratio. This is because these profits and losses are attributable to the hard work and labours of the old partners and consequently, the old partners are liable to bear past losses or profits, if any. The new partner is not entitled for a share in these profits as he/she did not contribute anything for the past performance of the business.
Accounting Treatment of Accumulated Profits and Losses
i) For distributing accumulated profits and reserves
Profit and Loss A/c Dr.
General Reserve A/c Dr.
Reserve Fund A/c Dr.
Workmen’s Compensation Fund A/c Dr.
Contingency Reserve A/c Dr.
To Old Partners’ Capital A/c
(Undistributed profits and reserves are distributed among old partners in their old profit sharing ratio)
ii) For distributing accumulated losses
Old Partners’ Capital A/c Dr.
To Profit and Loss (Debit balance) A/c
To Deferred Advertisement Expenses A/c
To Preliminary Expenses A/c
(Undistributed losses are distributed among old partners in their old profit sharing ratio)
APPEARS IN
संबंधित प्रश्न
X and Y are partners in a firm sharing profits and losses in the ratio of 3 : 2. On 1st April, 2019, they admit Z as a partner for 1/5th share in profits. On that date, there was a balance of ₹ 1,50,000 in General Reserve and a debit balance of ₹ 20,000 in the Profit and Loss Account of the firm. Pass necessary Journal entries regarding adjustment of reserve and accumulated profit/loss.
Mr. A commenced business with a capital of ₹ 2,50,000 on 1st April, 2013. During the five years ended 31st March, 2018, the following profits and losses were made:
31st March, 2014−Loss ₹ 5,000
31st March, 2015−Profit ₹ 13,000
31st March, 2016−Profit ₹ 17,000
31st March, 2017−Profit ₹ 20,000
31st March, 2018−Profit ₹ 25,000
During this period he had drawn ₹ 40,000 for his personal use. On 1st April, 2018, he admitted B into partnership on the following terms:
B to bring for his half share in the business, capital equal to A's Capital on 31st March, 2018 and to pay for the one-half share of goodwill of the business, on the basis of three times the average profit of the last five years. Prepare the statement showing what amount B should invest to become a partner and pass entries to record the transactions relating to admission.
A and B are partners in a business sharing profits and losses in the ratio of 1/3rd and 2/3rd. On 1st April, 2019, their capitals were ₹ 8,000 and ₹ 10,000 respectively. On that date, they admit C in partnership and give him 1/4th share in the future profits. C brings ₹ 8,000 as his capital and ₹ 6,000 as goodwill. The amount of goodwill is withdrawn by the old partners in cash. Draft the journal entries and show the Capital Accounts of all the Partners. Calculate proportion in which partners would share profits and losses in future.
Profit-Sharing ratio is the ratio in which the partners have agreed to share:
The accumulated profits and reserves are transferred to:
Revaluation Account or Profit and Loss Adjustment Account is:
