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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 premium is fully charged to revenue as and when paid?
  • 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)
    No treatment is required
Correct answer is option 'A'. Can you explain this answer?
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A, B and C takes a Joint Life Policy, after five years B retires from ...
's capital account for the surrender value of the policy?

The surrender value of the policy will be credited to the capital account of A, B and C in their profit sharing ratio of 2:2:1. After B's retirement, the new profit sharing ratio will be 3:2 (equal sharing between A and C), so the surrender value will be credited to their capital accounts in the ratio of 3:2.

The entry in the capital accounts will be:

A's capital account: Dr. Rs. 75,000 (3/5 of surrender value)
C's capital account: Dr. Rs. 50,000 (2/5 of surrender value)
To Joint Life Policy account: Cr. Rs. 1,25,000 (total surrender value)
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A, B and C takes a Joint Life Policy, after five years B retires from ...
Option A would be appropriate option
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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 premium is fully charged to revenue as and when paid?a)Rs. 50,000 credited to all the partners in old ratio.b)Rs. 2,50,000 credited to all the partners in old ratioc)Rs. 2,00,000 credited to all the partners in old ratiod)No treatment is requiredCorrect answer is option 'A'. 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 partner’s capital account on receiving the JLP amount if joint life premium is fully charged to revenue as and when paid?a)Rs. 50,000 credited to all the partners in old ratio.b)Rs. 2,50,000 credited to all the partners in old ratioc)Rs. 2,00,000 credited to all the partners in old ratiod)No treatment is requiredCorrect answer is option 'A'. 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 partner’s capital account on receiving the JLP amount if joint life premium is fully charged to revenue as and when paid?a)Rs. 50,000 credited to all the partners in old ratio.b)Rs. 2,50,000 credited to all the partners in old ratioc)Rs. 2,00,000 credited to all the partners in old ratiod)No treatment is requiredCorrect answer is option 'A'. 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 partner’s capital account on receiving the JLP amount if joint life premium is fully charged to revenue as and when paid?a)Rs. 50,000 credited to all the partners in old ratio.b)Rs. 2,50,000 credited to all the partners in old ratioc)Rs. 2,00,000 credited to all the partners in old ratiod)No treatment is requiredCorrect answer is option 'A'. Can you explain this answer?.
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