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Balances of A, B and C sharing profits and losses in proportionate to their capitals, stood as follows: Capital Accounts: A Rs. 2,00,000; B Rs. 3,00,000 and C Rs. 2,00,000; JLP Reserve Rs. 80,000 and JLP Rs. 80,000. A desired to retire form the firm and the remaining partners decided to carry on in equal ratio, Joint life policy of the partners surrendered and cash obtained Rs. 80,000. What will be the treatment for JLP?
- a)Cash received credited to Revaluation Account.
- b)JLP Reserve balance credited to Partner’s Capital Account in old profit sharing ratio.
- c)JSP Reserve balance credited to Partner’s Capital Account in new profit sharing ratio.
- d)Cash received credited to Partner’s Capital Account in old profit sharing ratio.
Correct answer is option 'B'. Can you explain this answer?
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Balances of A, B and C sharing profits and losses in proportionate to ...
Explanation:
A joint life policy (JLP) is a type of life insurance policy taken out by business partners to protect the financial stability of the partnership in the event of the death or retirement of one of the partners. In this case, Partner A wants to retire from the firm, and the remaining partners (B and C) have decided to continue the business in equal ratio.
Step 1: Surrender of Joint Life Policy (JLP)
The first step in the treatment of the JLP is to surrender the policy and obtain the cash value. In this case, the partners have received Rs. 80,000 cash by surrendering the JLP.
Step 2: Treatment of the Cash Received
The cash received from surrendering the JLP needs to be accounted for in the books of the partnership. In this case, the correct treatment is to credit the JLP Reserve balance to the Partners' Capital Accounts in the old profit sharing ratio.
Reasoning:
The JLP Reserve represents the accumulated profits or reserves of the partnership related to the JLP. As Partner A is retiring, the JLP Reserve needs to be distributed among the remaining partners (B and C) in their old profit sharing ratio. This is because the JLP Reserve was created based on the old profit sharing ratio, and it is fair to distribute it in the same ratio.
By crediting the JLP Reserve balance to the Partners' Capital Accounts in the old profit sharing ratio, the partners' capital will be increased, reflecting their entitlement to the JLP Reserve. This treatment ensures that the remaining partners (B and C) receive their fair share of the JLP Reserve and that the capital accounts are adjusted accordingly.
Conclusion:
The correct treatment for the JLP in this scenario is to credit the JLP Reserve balance to the Partners' Capital Accounts in the old profit sharing ratio. This ensures that the remaining partners (B and C) receive their fair share of the JLP Reserve, reflecting their entitlement to the accumulated profits or reserves related to the JLP.
A joint life policy (JLP) is a type of life insurance policy taken out by business partners to protect the financial stability of the partnership in the event of the death or retirement of one of the partners. In this case, Partner A wants to retire from the firm, and the remaining partners (B and C) have decided to continue the business in equal ratio.
Step 1: Surrender of Joint Life Policy (JLP)
The first step in the treatment of the JLP is to surrender the policy and obtain the cash value. In this case, the partners have received Rs. 80,000 cash by surrendering the JLP.
Step 2: Treatment of the Cash Received
The cash received from surrendering the JLP needs to be accounted for in the books of the partnership. In this case, the correct treatment is to credit the JLP Reserve balance to the Partners' Capital Accounts in the old profit sharing ratio.
Reasoning:
The JLP Reserve represents the accumulated profits or reserves of the partnership related to the JLP. As Partner A is retiring, the JLP Reserve needs to be distributed among the remaining partners (B and C) in their old profit sharing ratio. This is because the JLP Reserve was created based on the old profit sharing ratio, and it is fair to distribute it in the same ratio.
By crediting the JLP Reserve balance to the Partners' Capital Accounts in the old profit sharing ratio, the partners' capital will be increased, reflecting their entitlement to the JLP Reserve. This treatment ensures that the remaining partners (B and C) receive their fair share of the JLP Reserve and that the capital accounts are adjusted accordingly.
Conclusion:
The correct treatment for the JLP in this scenario is to credit the JLP Reserve balance to the Partners' Capital Accounts in the old profit sharing ratio. This ensures that the remaining partners (B and C) receive their fair share of the JLP Reserve, reflecting their entitlement to the accumulated profits or reserves related to the JLP.
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Balances of A, B and C sharing profits and losses in proportionate to their capitals, stood as follows: Capital Accounts: A Rs. 2,00,000; B Rs. 3,00,000 and C Rs. 2,00,000; JLP Reserve Rs. 80,000 and JLP Rs. 80,000. A desired to retire form the firm and the remaining partners decided to carry on in equal ratio, Joint life policy of the partners surrendered and cash obtained Rs. 80,000. What will be the treatment for JLP?a)Cash received credited to Revaluation Account.b)JLP Reserve balance credited to Partners Capital Account in old profit sharing ratio.c)JSP Reserve balance credited to Partners Capital Account in new profit sharing ratio.d)Cash received credited to Partners Capital Account in old profit sharing ratio.Correct answer is option 'B'. Can you explain this answer?
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Balances of A, B and C sharing profits and losses in proportionate to their capitals, stood as follows: Capital Accounts: A Rs. 2,00,000; B Rs. 3,00,000 and C Rs. 2,00,000; JLP Reserve Rs. 80,000 and JLP Rs. 80,000. A desired to retire form the firm and the remaining partners decided to carry on in equal ratio, Joint life policy of the partners surrendered and cash obtained Rs. 80,000. What will be the treatment for JLP?a)Cash received credited to Revaluation Account.b)JLP Reserve balance credited to Partners Capital Account in old profit sharing ratio.c)JSP Reserve balance credited to Partners Capital Account in new profit sharing ratio.d)Cash received credited to Partners Capital Account in old profit sharing ratio.Correct answer is option 'B'. Can you explain this answer? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Balances of A, B and C sharing profits and losses in proportionate to their capitals, stood as follows: Capital Accounts: A Rs. 2,00,000; B Rs. 3,00,000 and C Rs. 2,00,000; JLP Reserve Rs. 80,000 and JLP Rs. 80,000. A desired to retire form the firm and the remaining partners decided to carry on in equal ratio, Joint life policy of the partners surrendered and cash obtained Rs. 80,000. What will be the treatment for JLP?a)Cash received credited to Revaluation Account.b)JLP Reserve balance credited to Partners Capital Account in old profit sharing ratio.c)JSP Reserve balance credited to Partners Capital Account in new profit sharing ratio.d)Cash received credited to Partners Capital Account in old profit sharing ratio.Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Balances of A, B and C sharing profits and losses in proportionate to their capitals, stood as follows: Capital Accounts: A Rs. 2,00,000; B Rs. 3,00,000 and C Rs. 2,00,000; JLP Reserve Rs. 80,000 and JLP Rs. 80,000. A desired to retire form the firm and the remaining partners decided to carry on in equal ratio, Joint life policy of the partners surrendered and cash obtained Rs. 80,000. What will be the treatment for JLP?a)Cash received credited to Revaluation Account.b)JLP Reserve balance credited to Partners Capital Account in old profit sharing ratio.c)JSP Reserve balance credited to Partners Capital Account in new profit sharing ratio.d)Cash received credited to Partners Capital Account in old profit sharing ratio.Correct answer is option 'B'. Can you explain this answer?.
Balances of A, B and C sharing profits and losses in proportionate to their capitals, stood as follows: Capital Accounts: A Rs. 2,00,000; B Rs. 3,00,000 and C Rs. 2,00,000; JLP Reserve Rs. 80,000 and JLP Rs. 80,000. A desired to retire form the firm and the remaining partners decided to carry on in equal ratio, Joint life policy of the partners surrendered and cash obtained Rs. 80,000. What will be the treatment for JLP?a)Cash received credited to Revaluation Account.b)JLP Reserve balance credited to Partners Capital Account in old profit sharing ratio.c)JSP Reserve balance credited to Partners Capital Account in new profit sharing ratio.d)Cash received credited to Partners Capital Account in old profit sharing ratio.Correct answer is option 'B'. Can you explain this answer? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Balances of A, B and C sharing profits and losses in proportionate to their capitals, stood as follows: Capital Accounts: A Rs. 2,00,000; B Rs. 3,00,000 and C Rs. 2,00,000; JLP Reserve Rs. 80,000 and JLP Rs. 80,000. A desired to retire form the firm and the remaining partners decided to carry on in equal ratio, Joint life policy of the partners surrendered and cash obtained Rs. 80,000. What will be the treatment for JLP?a)Cash received credited to Revaluation Account.b)JLP Reserve balance credited to Partners Capital Account in old profit sharing ratio.c)JSP Reserve balance credited to Partners Capital Account in new profit sharing ratio.d)Cash received credited to Partners Capital Account in old profit sharing ratio.Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Balances of A, B and C sharing profits and losses in proportionate to their capitals, stood as follows: Capital Accounts: A Rs. 2,00,000; B Rs. 3,00,000 and C Rs. 2,00,000; JLP Reserve Rs. 80,000 and JLP Rs. 80,000. A desired to retire form the firm and the remaining partners decided to carry on in equal ratio, Joint life policy of the partners surrendered and cash obtained Rs. 80,000. What will be the treatment for JLP?a)Cash received credited to Revaluation Account.b)JLP Reserve balance credited to Partners Capital Account in old profit sharing ratio.c)JSP Reserve balance credited to Partners Capital Account in new profit sharing ratio.d)Cash received credited to Partners Capital Account in old profit sharing ratio.Correct answer is option 'B'. Can you explain this answer?.
Solutions for Balances of A, B and C sharing profits and losses in proportionate to their capitals, stood as follows: Capital Accounts: A Rs. 2,00,000; B Rs. 3,00,000 and C Rs. 2,00,000; JLP Reserve Rs. 80,000 and JLP Rs. 80,000. A desired to retire form the firm and the remaining partners decided to carry on in equal ratio, Joint life policy of the partners surrendered and cash obtained Rs. 80,000. What will be the treatment for JLP?a)Cash received credited to Revaluation Account.b)JLP Reserve balance credited to Partners Capital Account in old profit sharing ratio.c)JSP Reserve balance credited to Partners Capital Account in new profit sharing ratio.d)Cash received credited to Partners Capital Account in old profit sharing ratio.Correct answer is option 'B'. Can you explain this answer? in English & in Hindi are available as part of our courses for Commerce.
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Balances of A, B and C sharing profits and losses in proportionate to their capitals, stood as follows: Capital Accounts: A Rs. 2,00,000; B Rs. 3,00,000 and C Rs. 2,00,000; JLP Reserve Rs. 80,000 and JLP Rs. 80,000. A desired to retire form the firm and the remaining partners decided to carry on in equal ratio, Joint life policy of the partners surrendered and cash obtained Rs. 80,000. What will be the treatment for JLP?a)Cash received credited to Revaluation Account.b)JLP Reserve balance credited to Partners Capital Account in old profit sharing ratio.c)JSP Reserve balance credited to Partners Capital Account in new profit sharing ratio.d)Cash received credited to Partners Capital Account in old profit sharing ratio.Correct answer is option 'B'. Can you explain this answer?, a detailed solution for Balances of A, B and C sharing profits and losses in proportionate to their capitals, stood as follows: Capital Accounts: A Rs. 2,00,000; B Rs. 3,00,000 and C Rs. 2,00,000; JLP Reserve Rs. 80,000 and JLP Rs. 80,000. A desired to retire form the firm and the remaining partners decided to carry on in equal ratio, Joint life policy of the partners surrendered and cash obtained Rs. 80,000. What will be the treatment for JLP?a)Cash received credited to Revaluation Account.b)JLP Reserve balance credited to Partners Capital Account in old profit sharing ratio.c)JSP Reserve balance credited to Partners Capital Account in new profit sharing ratio.d)Cash received credited to Partners Capital Account in old profit sharing ratio.Correct answer is option 'B'. Can you explain this answer? has been provided alongside types of Balances of A, B and C sharing profits and losses in proportionate to their capitals, stood as follows: Capital Accounts: A Rs. 2,00,000; B Rs. 3,00,000 and C Rs. 2,00,000; JLP Reserve Rs. 80,000 and JLP Rs. 80,000. A desired to retire form the firm and the remaining partners decided to carry on in equal ratio, Joint life policy of the partners surrendered and cash obtained Rs. 80,000. What will be the treatment for JLP?a)Cash received credited to Revaluation Account.b)JLP Reserve balance credited to Partners Capital Account in old profit sharing ratio.c)JSP Reserve balance credited to Partners Capital Account in new profit sharing ratio.d)Cash received credited to Partners Capital Account in old profit sharing ratio.Correct answer is option 'B'. Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice Balances of A, B and C sharing profits and losses in proportionate to their capitals, stood as follows: Capital Accounts: A Rs. 2,00,000; B Rs. 3,00,000 and C Rs. 2,00,000; JLP Reserve Rs. 80,000 and JLP Rs. 80,000. A desired to retire form the firm and the remaining partners decided to carry on in equal ratio, Joint life policy of the partners surrendered and cash obtained Rs. 80,000. What will be the treatment for JLP?a)Cash received credited to Revaluation Account.b)JLP Reserve balance credited to Partners Capital Account in old profit sharing ratio.c)JSP Reserve balance credited to Partners Capital Account in new profit sharing ratio.d)Cash received credited to Partners Capital Account in old profit sharing ratio.Correct answer is option 'B'. Can you explain this answer? tests, examples and also practice Commerce tests.
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