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A, B & C are partners in a firm. B retired from the firm. Old profit sharing ratio is 2:2:1. After retirement A & C decide to share profit equally. They had taken a joint life policy of Rs.2,00,000 with the surrender value of Rs.40,000. What will be the amount to be credited to the partners’ capital account on receiving the JLP amount, if JLP a/c is maintained at surrender value?
- a)Rs.2,00,000
- b)Rs.40,000
- c)Rs.1,60,000
- d)None of these
Correct answer is option 'D'. Can you explain this answer?
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A, B & C are partners in a firm. B retired fromthe firm. Old profi...
Calculation of Profit Sharing Ratio
The old profit sharing ratio is given as 2:2:1. After B's retirement, A and C decided to share profits equally. Therefore, we can calculate the new profit sharing ratio as follows:
Old ratio of A:B:C = 2:2:1
B retires, and A and C share profits equally, so the new ratio of A:C will be 1:1
Therefore, the new profit sharing ratio of A:B:C will be 2:0:2 (as B has retired)
Calculation of Surrender Value of Joint Life Policy (JLP)
The joint life policy has a sum assured of Rs. 2,00,000 and a surrender value of Rs. 40,000. Since the JLP account is maintained at surrender value, we will credit the JLP account with this amount.
Calculation of Amount to be Credited to Partners' Capital Accounts
To calculate the amount to be credited to each partner's capital account, we need to follow these steps:
1. Calculate the total surrender value of the JLP account:
Total surrender value = Rs. 40,000
2. Calculate the total capital of the firm:
Total capital = A's capital + B's capital + C's capital
From the old profit sharing ratio, we know that A had twice the capital of B and C had the same capital as B. Therefore:
A:B:C = 2:2:1
Let B's capital be x. Then A's capital will be 2x and C's capital will be x.
Total capital = 2x + x + x = 4x
3. Calculate the new profit sharing ratio:
A:B:C = 2:0:2
4. Calculate the share of profit for each partner:
A's share = (2/4) * Total surrender value = Rs. 20,000
B's share = 0
C's share = (2/4) * Total surrender value = Rs. 20,000
5. Calculate the amount to be credited to each partner's capital account:
A's capital account will be credited with his share of profit i.e. Rs. 20,000.
B has retired, so there will be no change in his capital account.
C's capital account will be credited with his share of profit i.e. Rs. 20,000.
Therefore, the correct answer is option D - none of these.
The old profit sharing ratio is given as 2:2:1. After B's retirement, A and C decided to share profits equally. Therefore, we can calculate the new profit sharing ratio as follows:
Old ratio of A:B:C = 2:2:1
B retires, and A and C share profits equally, so the new ratio of A:C will be 1:1
Therefore, the new profit sharing ratio of A:B:C will be 2:0:2 (as B has retired)
Calculation of Surrender Value of Joint Life Policy (JLP)
The joint life policy has a sum assured of Rs. 2,00,000 and a surrender value of Rs. 40,000. Since the JLP account is maintained at surrender value, we will credit the JLP account with this amount.
Calculation of Amount to be Credited to Partners' Capital Accounts
To calculate the amount to be credited to each partner's capital account, we need to follow these steps:
1. Calculate the total surrender value of the JLP account:
Total surrender value = Rs. 40,000
2. Calculate the total capital of the firm:
Total capital = A's capital + B's capital + C's capital
From the old profit sharing ratio, we know that A had twice the capital of B and C had the same capital as B. Therefore:
A:B:C = 2:2:1
Let B's capital be x. Then A's capital will be 2x and C's capital will be x.
Total capital = 2x + x + x = 4x
3. Calculate the new profit sharing ratio:
A:B:C = 2:0:2
4. Calculate the share of profit for each partner:
A's share = (2/4) * Total surrender value = Rs. 20,000
B's share = 0
C's share = (2/4) * Total surrender value = Rs. 20,000
5. Calculate the amount to be credited to each partner's capital account:
A's capital account will be credited with his share of profit i.e. Rs. 20,000.
B has retired, so there will be no change in his capital account.
C's capital account will be credited with his share of profit i.e. Rs. 20,000.
Therefore, the correct answer is option D - none of these.
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A, B & C are partners in a firm. B retired fromthe firm. Old profit sharing ratio is 2:2:1. After retirement A & C decide to share profitequally. They had taken a joint life policy ofRs.2,00,000 with the surrender value ofRs.40,000. What will be the amount to becredited to the partners’ capital accountonreceiving the JLP amount, if JLP a/c ismaintained at surrender value?a)Rs.2,00,000b)Rs.40,000c)Rs.1,60,000d)None of theseCorrect answer is option 'D'. Can you explain this answer?
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A, B & C are partners in a firm. B retired fromthe firm. Old profit sharing ratio is 2:2:1. After retirement A & C decide to share profitequally. They had taken a joint life policy ofRs.2,00,000 with the surrender value ofRs.40,000. What will be the amount to becredited to the partners’ capital accountonreceiving the JLP amount, if JLP a/c ismaintained at surrender value?a)Rs.2,00,000b)Rs.40,000c)Rs.1,60,000d)None of theseCorrect answer is option 'D'. Can you explain this answer? for CA CPT 2024 is part of CA CPT preparation. The Question and answers have been prepared according to the CA CPT exam syllabus. Information about A, B & C are partners in a firm. B retired fromthe firm. Old profit sharing ratio is 2:2:1. After retirement A & C decide to share profitequally. They had taken a joint life policy ofRs.2,00,000 with the surrender value ofRs.40,000. What will be the amount to becredited to the partners’ capital accountonreceiving the JLP amount, if JLP a/c ismaintained at surrender value?a)Rs.2,00,000b)Rs.40,000c)Rs.1,60,000d)None of theseCorrect answer is option 'D'. Can you explain this answer? covers all topics & solutions for CA CPT 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A, B & C are partners in a firm. B retired fromthe firm. Old profit sharing ratio is 2:2:1. After retirement A & C decide to share profitequally. They had taken a joint life policy ofRs.2,00,000 with the surrender value ofRs.40,000. What will be the amount to becredited to the partners’ capital accountonreceiving the JLP amount, if JLP a/c ismaintained at surrender value?a)Rs.2,00,000b)Rs.40,000c)Rs.1,60,000d)None of theseCorrect answer is option 'D'. Can you explain this answer?.
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