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A, B and C takes a Joint Life Policy, after five years B retires from the firm. Old profit sharing ratio is 2:2:1. After retirement A and C decides to share profits equally. They had taken a Joint Life Policy of Rs. 2,50,000 with the surrender value Rs. 50,000. What will be the treatment in the partner’s capital account on receiving the JLP amount if joint life policy is maintained at surrender along with the reserve?
- a)Rs. 50,000 credited to all the partners in old ratio.
- b)Rs. 2,50,000 credited to all the partners in old ratio.
- c)Rs. 2,00,000 credited to all the partners in old ratio.
- d)Distribute JLP Reserve Account in old profit sharing ratio.
Correct answer is option 'D'. Can you explain this answer?
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A, B and C takes a Joint Life Policy, after five years B retires from ...
Treatment in Partners Capital Account on Receiving the JLP Amount
Distribution of JLP Proceeds:
The partners' capital accounts need to be adjusted after receiving the Joint Life Policy (JLP) amount. The distribution of JLP proceeds depends on the terms of the partnership agreement and the profit-sharing ratio at the time of retirement.
Options for Distribution:
There are four possible options for distributing the JLP proceeds:
a) Rs. 50,000 credited to all the partners in old ratio.
b) Rs. 2,50,000 credited to all the partners in old ratio.
c) Rs. 2,00,000 credited to all the partners in old ratio.
d) Distribute JLP Reserve Account in old profit-sharing ratio.
Since B retired from the firm, the old profit sharing ratio of 2:2:1 is no longer valid. Therefore, option (a) and (b) can be eliminated.
Equal Profit-Sharing Ratio:
After B's retirement, A and C decided to share profits equally. Therefore, the new profit-sharing ratio is 1:1. The surrender value of the JLP is Rs. 50,000, and the sum insured is Rs. 2,50,000. The difference between the sum insured and the surrender value is the JLP Reserve Account.
Calculation of JLP Reserve Account:
JLP Reserve Account = Sum Insured - Surrender Value
JLP Reserve Account = Rs. 2,50,000 - Rs. 50,000
JLP Reserve Account = Rs. 2,00,000
Distribution of JLP Reserve Account:
As per option (d), the JLP Reserve Account should be distributed in the old profit-sharing ratio. The old profit sharing ratio was 2:2:1. Therefore, the JLP Reserve Account should be distributed as follows:
A's share = (2/5) * Rs. 2,00,000
A's share = Rs. 80,000
B's share = (2/5) * Rs. 2,00,000
B's share = Rs. 80,000
C's share = (1/5) * Rs. 2,00,000
C's share = Rs. 40,000
Adjustment in Capital Accounts:
The partners' capital accounts should be adjusted as follows:
A's capital account should be credited with Rs. 80,000
B's capital account should be credited with Rs. 80,000 (if the retirement settlement has not been made)
C's capital account should be credited with Rs. 40,000
Conclusion:
Option (d) is the correct answer. The JLP Reserve Account should be distributed in the old profit-sharing ratio. A's and C's capital accounts should be credited with their respective shares in the JLP Reserve Account. If B's retirement settlement has not been made, his capital account should be credited with his share in the JLP Reserve Account.
Distribution of JLP Proceeds:
The partners' capital accounts need to be adjusted after receiving the Joint Life Policy (JLP) amount. The distribution of JLP proceeds depends on the terms of the partnership agreement and the profit-sharing ratio at the time of retirement.
Options for Distribution:
There are four possible options for distributing the JLP proceeds:
a) Rs. 50,000 credited to all the partners in old ratio.
b) Rs. 2,50,000 credited to all the partners in old ratio.
c) Rs. 2,00,000 credited to all the partners in old ratio.
d) Distribute JLP Reserve Account in old profit-sharing ratio.
Since B retired from the firm, the old profit sharing ratio of 2:2:1 is no longer valid. Therefore, option (a) and (b) can be eliminated.
Equal Profit-Sharing Ratio:
After B's retirement, A and C decided to share profits equally. Therefore, the new profit-sharing ratio is 1:1. The surrender value of the JLP is Rs. 50,000, and the sum insured is Rs. 2,50,000. The difference between the sum insured and the surrender value is the JLP Reserve Account.
Calculation of JLP Reserve Account:
JLP Reserve Account = Sum Insured - Surrender Value
JLP Reserve Account = Rs. 2,50,000 - Rs. 50,000
JLP Reserve Account = Rs. 2,00,000
Distribution of JLP Reserve Account:
As per option (d), the JLP Reserve Account should be distributed in the old profit-sharing ratio. The old profit sharing ratio was 2:2:1. Therefore, the JLP Reserve Account should be distributed as follows:
A's share = (2/5) * Rs. 2,00,000
A's share = Rs. 80,000
B's share = (2/5) * Rs. 2,00,000
B's share = Rs. 80,000
C's share = (1/5) * Rs. 2,00,000
C's share = Rs. 40,000
Adjustment in Capital Accounts:
The partners' capital accounts should be adjusted as follows:
A's capital account should be credited with Rs. 80,000
B's capital account should be credited with Rs. 80,000 (if the retirement settlement has not been made)
C's capital account should be credited with Rs. 40,000
Conclusion:
Option (d) is the correct answer. The JLP Reserve Account should be distributed in the old profit-sharing ratio. A's and C's capital accounts should be credited with their respective shares in the JLP Reserve Account. If B's retirement settlement has not been made, his capital account should be credited with his share in the JLP Reserve Account.
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A, B and C takes a Joint Life Policy, after five years B retires from the firm. Old profit sharing ratio is 2:2:1. After retirement A and C decides to share profits equally. They had taken a Joint Life Policy of Rs. 2,50,000 with the surrender value Rs. 50,000. What will be the treatment in the partners capital account on receiving the JLP amount if joint life policy is maintained at surrender along with the reserve?a)Rs. 50,000 credited to all the partners in old ratio.b)Rs. 2,50,000 credited to all the partners in old ratio.c)Rs. 2,00,000 credited to all the partners in old ratio.d)Distribute JLP Reserve Account in old profit sharing ratio.Correct answer is option 'D'. Can you explain this answer?
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A, B and C takes a Joint Life Policy, after five years B retires from the firm. Old profit sharing ratio is 2:2:1. After retirement A and C decides to share profits equally. They had taken a Joint Life Policy of Rs. 2,50,000 with the surrender value Rs. 50,000. What will be the treatment in the partners capital account on receiving the JLP amount if joint life policy is maintained at surrender along with the reserve?a)Rs. 50,000 credited to all the partners in old ratio.b)Rs. 2,50,000 credited to all the partners in old ratio.c)Rs. 2,00,000 credited to all the partners in old ratio.d)Distribute JLP Reserve Account in old profit sharing ratio.Correct answer is option 'D'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about A, B and C takes a Joint Life Policy, after five years B retires from the firm. Old profit sharing ratio is 2:2:1. After retirement A and C decides to share profits equally. They had taken a Joint Life Policy of Rs. 2,50,000 with the surrender value Rs. 50,000. What will be the treatment in the partners capital account on receiving the JLP amount if joint life policy is maintained at surrender along with the reserve?a)Rs. 50,000 credited to all the partners in old ratio.b)Rs. 2,50,000 credited to all the partners in old ratio.c)Rs. 2,00,000 credited to all the partners in old ratio.d)Distribute JLP Reserve Account in old profit sharing ratio.Correct answer is option 'D'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A, B and C takes a Joint Life Policy, after five years B retires from the firm. Old profit sharing ratio is 2:2:1. After retirement A and C decides to share profits equally. They had taken a Joint Life Policy of Rs. 2,50,000 with the surrender value Rs. 50,000. What will be the treatment in the partners capital account on receiving the JLP amount if joint life policy is maintained at surrender along with the reserve?a)Rs. 50,000 credited to all the partners in old ratio.b)Rs. 2,50,000 credited to all the partners in old ratio.c)Rs. 2,00,000 credited to all the partners in old ratio.d)Distribute JLP Reserve Account in old profit sharing ratio.Correct answer is option 'D'. Can you explain this answer?.
A, B and C takes a Joint Life Policy, after five years B retires from the firm. Old profit sharing ratio is 2:2:1. After retirement A and C decides to share profits equally. They had taken a Joint Life Policy of Rs. 2,50,000 with the surrender value Rs. 50,000. What will be the treatment in the partners capital account on receiving the JLP amount if joint life policy is maintained at surrender along with the reserve?a)Rs. 50,000 credited to all the partners in old ratio.b)Rs. 2,50,000 credited to all the partners in old ratio.c)Rs. 2,00,000 credited to all the partners in old ratio.d)Distribute JLP Reserve Account in old profit sharing ratio.Correct answer is option 'D'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about A, B and C takes a Joint Life Policy, after five years B retires from the firm. Old profit sharing ratio is 2:2:1. After retirement A and C decides to share profits equally. They had taken a Joint Life Policy of Rs. 2,50,000 with the surrender value Rs. 50,000. What will be the treatment in the partners capital account on receiving the JLP amount if joint life policy is maintained at surrender along with the reserve?a)Rs. 50,000 credited to all the partners in old ratio.b)Rs. 2,50,000 credited to all the partners in old ratio.c)Rs. 2,00,000 credited to all the partners in old ratio.d)Distribute JLP Reserve Account in old profit sharing ratio.Correct answer is option 'D'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A, B and C takes a Joint Life Policy, after five years B retires from the firm. Old profit sharing ratio is 2:2:1. After retirement A and C decides to share profits equally. They had taken a Joint Life Policy of Rs. 2,50,000 with the surrender value Rs. 50,000. What will be the treatment in the partners capital account on receiving the JLP amount if joint life policy is maintained at surrender along with the reserve?a)Rs. 50,000 credited to all the partners in old ratio.b)Rs. 2,50,000 credited to all the partners in old ratio.c)Rs. 2,00,000 credited to all the partners in old ratio.d)Distribute JLP Reserve Account in old profit sharing ratio.Correct answer is option 'D'. Can you explain this answer?.
Solutions for A, B and C takes a Joint Life Policy, after five years B retires from the firm. Old profit sharing ratio is 2:2:1. After retirement A and C decides to share profits equally. They had taken a Joint Life Policy of Rs. 2,50,000 with the surrender value Rs. 50,000. What will be the treatment in the partners capital account on receiving the JLP amount if joint life policy is maintained at surrender along with the reserve?a)Rs. 50,000 credited to all the partners in old ratio.b)Rs. 2,50,000 credited to all the partners in old ratio.c)Rs. 2,00,000 credited to all the partners in old ratio.d)Distribute JLP Reserve Account in old profit sharing ratio.Correct answer is option 'D'. Can you explain this answer? in English & in Hindi are available as part of our courses for CA Foundation.
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A, B and C takes a Joint Life Policy, after five years B retires from the firm. Old profit sharing ratio is 2:2:1. After retirement A and C decides to share profits equally. They had taken a Joint Life Policy of Rs. 2,50,000 with the surrender value Rs. 50,000. What will be the treatment in the partners capital account on receiving the JLP amount if joint life policy is maintained at surrender along with the reserve?a)Rs. 50,000 credited to all the partners in old ratio.b)Rs. 2,50,000 credited to all the partners in old ratio.c)Rs. 2,00,000 credited to all the partners in old ratio.d)Distribute JLP Reserve Account in old profit sharing ratio.Correct answer is option 'D'. Can you explain this answer?, a detailed solution for A, B and C takes a Joint Life Policy, after five years B retires from the firm. Old profit sharing ratio is 2:2:1. After retirement A and C decides to share profits equally. They had taken a Joint Life Policy of Rs. 2,50,000 with the surrender value Rs. 50,000. What will be the treatment in the partners capital account on receiving the JLP amount if joint life policy is maintained at surrender along with the reserve?a)Rs. 50,000 credited to all the partners in old ratio.b)Rs. 2,50,000 credited to all the partners in old ratio.c)Rs. 2,00,000 credited to all the partners in old ratio.d)Distribute JLP Reserve Account in old profit sharing ratio.Correct answer is option 'D'. Can you explain this answer? has been provided alongside types of A, B and C takes a Joint Life Policy, after five years B retires from the firm. Old profit sharing ratio is 2:2:1. After retirement A and C decides to share profits equally. They had taken a Joint Life Policy of Rs. 2,50,000 with the surrender value Rs. 50,000. What will be the treatment in the partners capital account on receiving the JLP amount if joint life policy is maintained at surrender along with the reserve?a)Rs. 50,000 credited to all the partners in old ratio.b)Rs. 2,50,000 credited to all the partners in old ratio.c)Rs. 2,00,000 credited to all the partners in old ratio.d)Distribute JLP Reserve Account in old profit sharing ratio.Correct answer is option 'D'. Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice A, B and C takes a Joint Life Policy, after five years B retires from the firm. Old profit sharing ratio is 2:2:1. After retirement A and C decides to share profits equally. They had taken a Joint Life Policy of Rs. 2,50,000 with the surrender value Rs. 50,000. What will be the treatment in the partners capital account on receiving the JLP amount if joint life policy is maintained at surrender along with the reserve?a)Rs. 50,000 credited to all the partners in old ratio.b)Rs. 2,50,000 credited to all the partners in old ratio.c)Rs. 2,00,000 credited to all the partners in old ratio.d)Distribute JLP Reserve Account in old profit sharing ratio.Correct answer is option 'D'. Can you explain this answer? tests, examples and also practice CA Foundation tests.
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