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Question
On the retirement of Hari from the firm of 'Hari, Ram and Sharma' the balance-sheet showed a debit balance of Rs 12,000 in the profit and loss account. For calculating the amount payable to Hari this the balance will be transferred
(a) to the credit of the capital accounts of Hari, Ram and Sharma equally
(b) to the debit of the capital accounts of Hari, Ram and Sharma equally
(c) to the debit of the capital accounts of Ram and Sharma equally
(d) to the credit of the capital accounts of Ram and Sharma equally
Solution
to the debit of the capital accounts of Hari, Ram and Sharma equally
When a partner retires, the balance of accumulated profits and losses is transferred among all the partners in the old ratio. Here, debit balance of Rs 12,000 in the Profit and Loss Account will be debited (being a loss) to the capital accounts of Hari, Ram and Sharma equally.
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RELATED QUESTIONS
Give the journal entry to distribute Workman Compensation Reserve' of Rs 60,000 at the time of retirement of Sajjan, when there is not claim against it. The firm has three partners Rajat, Sajjan and Kavita.
From the following information provided, prepare a comparative income statement for the period 2008 and 2009:
|
Particulars |
2008 |
2009 |
|
Sales (Rs) |
6,00,000 |
8,00,000 |
|
Gross Profit |
40% on sales |
50% on sales |
|
Administrative expenses |
20% of Gross profit |
15% of Gross profit |
|
Income tax |
50% |
50% |
L, M and N are partners sharing profits in the ratio of 5: 3 : 2. They decided to share profits equally with effect from 1st April, 2022. On that date, there was a balance of ₹ 2,00,000 in General Reserve and a credit balance of ₹ 4,00,000 in the Profit and Loss Account. The Journal Entry for the above on account of change in profit sharing ratio will be:
