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A and B sharing profits and losses in the ratio of 2 : 3, decide to share future profits and losses equally with effect from 1st April, 2016. An extract of their Balance Sheet as at 31st march, 2016 is as follows: 6 Liabilities ` Assets ` Workmen compensation Reserve 40,000 Show the accounting treatment under the following alternative cases: Case (i) If there is no other information. Cash (ii) If a claim on account of workmen’s compensation is estimated at `25,000. Cash (iii) If a claim on account of workmen’s compensation is estimated at `40,000. Case (iv) If a claim on account of workmen’s compensation is estimated at `50,000 |
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Answer» Answer: A and B sharing profits and losses in the RATIO of 2:3 , decided to share future profits and losses equally with effect from 1st APRIL 2021. An extract of their Balance SHEET as at 31st March, 2021 is as shows: Workman Compensation Reserve is Rs. 40000. Show the accounting treatment under the FOLLOWING alternative cases: CASE(i) If there is no other information Case(ii) If a claim on account of workmen's compensation is estimated at Rs. 25000. Case (iii) If a claim on account of workmen's compensation is estimated at Rs.40000. Case (iv) If a claim on account of workmen's compensation is estimated at Rs. 50000 |
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