Distribution of accumulated profits, reserves and losses
Profits and losses of previous years which are not distributed to the partners are known as accumulated profits and losses. Reserve includes general reserve, reserve fund, workmen compensation fund and investment fluctuation fund. As the accumulated profits and losses belong to all the partners, these should be distributed to all the partners in the old profit sharing ratio. Incase of workmen compensation fund, the excess amount after providing for anticipated claim is to be transferred. Following are the journal entries to be passed:
Vivin, Hari and Joy are partners sharing profits and losses in the ratio of 3:2:1. On 31.3.2017, Hari retired. On the date of retirement, the books of the firm showed a general reserve of 60,000. Pass the journal entry to transfer the general reserve.
Mary, Meena and Mariam are partners of a firm sharing profits and losses equally. Mary retired from the partnership on 1.1.2019. On that date, their balance sheet showed accumulated loss of ₹ 75,000 on the asset side of the balance sheet. Give the journal entry to distribute the accumulated loss.
Prince, Dev and Sasireka are partners in a firm sharing profits and losses in the ratio of 2:4:1. Their balance sheet as on 31st March, 2019 is as follows:
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