E H Kare partners who share income equally At the end of the piecemeal...
E H Kare partners who share income equally
At the end of the piecemeal distribution, the capital balance of the partners is as follows:
- E: ₹ 65000
- H: ₹ 67000
- K: ₹ 64000
The fixed assets, valued at ₹ 110000, were sold for ₹ 92000. We need to determine how much of the loss on realization should be allocated to partner E.
Loss on Realization
The loss on realization is the difference between the value of the fixed assets and the amount realized from their sale. In this case, the loss on realization is ₹ 110000 - ₹ 92000 = ₹ 18000.
Allocation of Loss
The loss on realization should be allocated among the partners in their profit sharing ratio. In this case, the partners share income equally, so the profit sharing ratio is 1:1:1.
To determine the allocation of the loss, we need to calculate the total capital of the partners. The total capital is the sum of the capital balances of all partners. In this case, the total capital is ₹ 65000 + ₹ 67000 + ₹ 64000 = ₹ 196000.
Next, we calculate the loss to be allocated to partner E. To do this, we divide the loss on realization by the total capital and multiply it by partner E's capital balance.
Loss allocated to E = (Loss on Realization / Total Capital) * Partner E's Capital Balance
= (₹ 18000 / ₹ 196000) * ₹ 65000
= ₹ 5948.98 (rounded to ₹ 5949)
Therefore, the loss on realization should be allocated to partner E as ₹ 5949.
Conclusion
In conclusion, partner E should bear a loss of ₹ 5949 on the realization of the fixed assets. This allocation is based on the profit sharing ratio of 1:1:1 and partner E's capital balance in relation to the total capital of the partners.
E H Kare partners who share income equally At the end of the piecemeal...
₹ 6000