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21-Bet cat and ret for partners sharing profits and losses in the ratio 5:3:2.Cat
retired and on that date there was a balance of investment of 4,00,000 andinvestment fluctuation reserve of 1, 00, ,000 was appearing in the balance
sheet. pass necessary journal entries for investment fluctuation reserve in the
following cases:-
1) market value of investment was 4, 80 000
2) market value of investment was 3,80,000
3) market value of investment was 2,90,000
3) market value of investment was 2,90,000,?
Most Upvoted Answer
21-Bet cat and ret for partners sharing profits and losses in the rati...
Introduction
To address the retirement of Cat and the necessary journal entries for the Investment Fluctuation Reserve (IFR), we first need to analyze the market values of investments and how they affect the partners' accounts.
1) Market Value of Investment: 4,80,000
- The market value exceeds the book value (4,00,000).
- No adjustment is necessary as the IFR can remain, and profit-sharing remains unchanged.
Journal Entry:
- No entry required.
2) Market Value of Investment: 3,80,000
- The market value is less than the book value.
- A loss of 20,000 needs to be recognized, impacting the IFR.
Journal Entry:
- Debit: Investment Fluctuation Reserve 20,000
- Credit: Partners’ Capital Accounts (5:3:2 ratio)
- 5,000 to Partner A
- 3,000 to Partner B
- 2,000 to Partner C
3) Market Value of Investment: 2,90,000
- The market value is significantly lower, indicating a loss of 1,10,000.
- The IFR must be adjusted accordingly.
Journal Entry:
- Debit: Investment Fluctuation Reserve 1,10,000
- Credit: Partners’ Capital Accounts (5:3:2 ratio)
- 50,000 to Partner A
- 30,000 to Partner B
- 20,000 to Partner C
4) Market Value of Investment: 2,90,000 (Reiteration)
- The situation remains unchanged with a loss of 1,10,000.
- Same adjustments as above apply.
Conclusion
- Adjustments to the IFR reflect the changes in market valuation of investments.
- All journal entries ensure an accurate representation of partners' capital accounts in accordance with profit-sharing ratios.
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21-Bet cat and ret for partners sharing profits and losses in the ratio 5:3:2.Catretired and on that date there was a balance of investment of 4,00,000 andinvestment fluctuation reserve of 1, 00, ,000 was appearing in the balancesheet. pass necessary journal entries for investment fluctuation reserve in thefollowing cases:-1) market value of investment was 4, 80 0002) market value of investment was 3,80,0003) market value of investment was 2,90,000 3) market value of investment was 2,90,000,?
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21-Bet cat and ret for partners sharing profits and losses in the ratio 5:3:2.Catretired and on that date there was a balance of investment of 4,00,000 andinvestment fluctuation reserve of 1, 00, ,000 was appearing in the balancesheet. pass necessary journal entries for investment fluctuation reserve in thefollowing cases:-1) market value of investment was 4, 80 0002) market value of investment was 3,80,0003) market value of investment was 2,90,000 3) market value of investment was 2,90,000,? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about 21-Bet cat and ret for partners sharing profits and losses in the ratio 5:3:2.Catretired and on that date there was a balance of investment of 4,00,000 andinvestment fluctuation reserve of 1, 00, ,000 was appearing in the balancesheet. pass necessary journal entries for investment fluctuation reserve in thefollowing cases:-1) market value of investment was 4, 80 0002) market value of investment was 3,80,0003) market value of investment was 2,90,000 3) market value of investment was 2,90,000,? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for 21-Bet cat and ret for partners sharing profits and losses in the ratio 5:3:2.Catretired and on that date there was a balance of investment of 4,00,000 andinvestment fluctuation reserve of 1, 00, ,000 was appearing in the balancesheet. pass necessary journal entries for investment fluctuation reserve in thefollowing cases:-1) market value of investment was 4, 80 0002) market value of investment was 3,80,0003) market value of investment was 2,90,000 3) market value of investment was 2,90,000,?.
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