Question :
R, B and L were partners in a firm sharing profits and losses in the ratio equally. With effect from 1st April, 2018 they decided to share future profits and losses in the ratio of 3:2:1. On that date their Balance Sheet showed a debit balance of Rs. 24,000 in Profit and Loss Account and a balance of Rs. 1,44,000 in General Reserve.
It was also agreed that:
(a) The goodwill of the firm be valued at Rs. 1,80,000.
(b) The Land (having book value of Rs. 3,00,000) will be valued at Rs. 4,80,000.
Treatment of General Reserve?
Option 1: Debited each partners capital account with Rs 48,000
Option 2: Credited each partners capital account by Rs 48,000
Option 3: Both 1 and 2
Option 4: None of the above
Correct Answer: Credited each partners capital account by Rs 48,000
Solution : Answer = Credited each partner's capital account by Rs 48,000
General Reserve A/c Dr 1,44,000
To R's Capital A/c 48000
To B's Capital A/c 48000
To L's Capital A/c 48000
(old ratio = 1:1:1) Hence, the correct option is 2.
R, B and L were partners in a firm sharing profits and losses in the ratio equally. With effect from 1st April, 2018 they decided to share future profits and losses in the ratio of 3:2:1. On that date their Balance Sheet showed a
Accumulated losses on the retirement of a partner are
At the time of the reissue of all forfeited shares
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