Balances of Ram, Hari Mohan sharing profits and losses in the ratio 2:3:2 stood as follows: Capital Accounts: Ram Rs. 10,00,000; Hari Rs. 15,00,000; Mohan Rs. 10,00,000; Joint Life Policy Rs. 3,50,000. Hari desired to retire from the firm and the remaining partners decided to carry on with the future profit sharing ratio of 3:2. Joint Life Policy of the partners surrendered and cash obtained Rs. 3,50,000. What would be the treatment for JLP?a)Rs. 3,50,000 credited to partners capital account in new ratio.b)Rs. 3,50,000 credited to partners capital account in old ratio.c)Rs. 3,50,000 credited to partners capital account in capital ratio.d)Rs. 3,50,000 credited to JLP account.Correct answer is option 'D'. Can you explain this answer?

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Balances of Ram, Hari & Mohan sharing profits and losses in the ratio 2:3:2 stood as follows: Capital Accounts: Ram Rs. 10,00,000; Hari Rs. 15,00,000; Mohan Rs. 10,00,000; Joint Life Policy Rs. 3,50,000. Hari desired to retire from the firm and the remaining partners decided to carry on with the future profit sharing ratio of 3:2. Joint Life Policy of the partners surrendered and cash obtained Rs. 3,50,000. What would be the treatment for JLP?

a)
Rs. 3,50,000 credited to partner’s capital account in new ratio.
b)
Rs. 3,50,000 credited to partner’s capital account in old ratio.
c)
Rs. 3,50,000 credited to partner’s capital account in capital ratio.
d)
Rs. 3,50,000 credited to JLP account.

Correct answer is option 'D'. Can you explain this answer?

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Balances of Ram, Hari Mohan sharing profits and losses in the ratio 2...

Treatment for Joint Life Policy in the given scenario:

1. Surrendering of Joint Life Policy:
- The Joint Life Policy held by the partners is surrendered and cash of Rs. 3,50,000 is obtained.

2. Treatment of cash obtained:
- The cash obtained from the surrender of JLP needs to be credited to the JLP account.

3. Reason for crediting to JLP account:
- As per the accounting principles, any gains or losses arising from the surrender of a policy should be credited or debited to the policy account.
- In this case, the JLP account is credited with Rs. 3,50,000 as it represents the surrender value of the policy.

4. Final treatment of JLP account:
- As the JLP account has been credited with the surrender value, it should be closed by transferring the balance to the partners' capital accounts in the old profit sharing ratio.
- The JLP account will be debited and the partners' capital accounts will be credited in the old ratio of 2:3:2.
- This is because the JLP was held by all partners in the old ratio and the surrender value needs to be distributed among them in the same ratio.

Therefore, the correct option is 'D' - Rs. 3,50,000 credited to JLP account.

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Balances of Ram, Hari Mohan sharing profits and losses in the ratio 2:3:2 stood as follows: Capital Accounts: Ram Rs. 10,00,000; Hari Rs. 15,00,000; Mohan Rs. 10,00,000; Joint Life Policy Rs. 3,50,000. Hari desired to retire from the firm and the remaining partners decided to carry on with the future profit sharing ratio of 3:2. Joint Life Policy of the partners surrendered and cash obtained Rs. 3,50,000. What would be the treatment for JLP?a)Rs. 3,50,000 credited to partners capital account in new ratio.b)Rs. 3,50,000 credited to partners capital account in old ratio.c)Rs. 3,50,000 credited to partners capital account in capital ratio.d)Rs. 3,50,000 credited to JLP account.Correct answer is option 'D'. Can you explain this answer?

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Balances of Ram, Hari Mohan sharing profits and losses in the ratio 2:3:2 stood as follows: Capital Accounts: Ram Rs. 10,00,000; Hari Rs. 15,00,000; Mohan Rs. 10,00,000; Joint Life Policy Rs. 3,50,000. Hari desired to retire from the firm and the remaining partners decided to carry on with the future profit sharing ratio of 3:2. Joint Life Policy of the partners surrendered and cash obtained Rs. 3,50,000. What would be the treatment for JLP?a)Rs. 3,50,000 credited to partners capital account in new ratio.b)Rs. 3,50,000 credited to partners capital account in old ratio.c)Rs. 3,50,000 credited to partners capital account in capital ratio.d)Rs. 3,50,000 credited to JLP account.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 Balances of Ram, Hari Mohan sharing profits and losses in the ratio 2:3:2 stood as follows: Capital Accounts: Ram Rs. 10,00,000; Hari Rs. 15,00,000; Mohan Rs. 10,00,000; Joint Life Policy Rs. 3,50,000. Hari desired to retire from the firm and the remaining partners decided to carry on with the future profit sharing ratio of 3:2. Joint Life Policy of the partners surrendered and cash obtained Rs. 3,50,000. What would be the treatment for JLP?a)Rs. 3,50,000 credited to partners capital account in new ratio.b)Rs. 3,50,000 credited to partners capital account in old ratio.c)Rs. 3,50,000 credited to partners capital account in capital ratio.d)Rs. 3,50,000 credited to JLP account.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 Balances of Ram, Hari Mohan sharing profits and losses in the ratio 2:3:2 stood as follows: Capital Accounts: Ram Rs. 10,00,000; Hari Rs. 15,00,000; Mohan Rs. 10,00,000; Joint Life Policy Rs. 3,50,000. Hari desired to retire from the firm and the remaining partners decided to carry on with the future profit sharing ratio of 3:2. Joint Life Policy of the partners surrendered and cash obtained Rs. 3,50,000. What would be the treatment for JLP?a)Rs. 3,50,000 credited to partners capital account in new ratio.b)Rs. 3,50,000 credited to partners capital account in old ratio.c)Rs. 3,50,000 credited to partners capital account in capital ratio.d)Rs. 3,50,000 credited to JLP account.Correct answer is option 'D'. Can you explain this answer?.

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