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Naresh, David and Aslam are partners sharing profits in the ratio of 5 : 3 : 7. On April 1st, 2012, Naresh gave a notice to retire from the firm. David and Aslam decided to share future profits in the ratio of 2:3. The adjusted capital accounts of David and Aslam show a balance of Rs 33,000 and Rs 70,500 respectively. The total amount to be paid to Naresh is Rs 90,500. This amount is to be paid by David and Aslam in such a way that their capital become proportionate to their new profit sharing ratio. Pass necessary journal entries for the above transactions in the books of the firm. Show your working clearly. |
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Answer» Naresh, David and Aslam are partners sharing profits in the ratio of 5 : 3 : 7. On April 1st, 2012, Naresh gave a notice to retire from the firm. David and Aslam decided to share future profits in the ratio of 2:3. The adjusted capital accounts of David and Aslam show a balance of Rs 33,000 and Rs 70,500 respectively. The total amount to be paid to Naresh is Rs 90,500. This amount is to be paid by David and Aslam in such a way that their capital become proportionate to their new profit sharing ratio. Pass necessary journal entries for the above transactions in the books of the firm. Show your working clearly. |
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