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Target Exam

CUET

Subject

Accountancy

Chapter

Reconstitution of Partnership Firm: Retirement and Death

Question:

A, B and C are partners, sharing profits and losses in the ratio 4:3:3. On the retirement of C, workmen's compensation fund was of Rs 40,000 in the Balance Sheet. Journal Entry will be:

Options:

Revaluation A/c Dr- 40,000
   To Capital A/C - 40,000
(Reserve distributed)

A's Capital A/C Dr - 16,000
B's Capital A/C Dr - 12,000
C's Capital A/C Dr - 12,000
   To Workmen's Compensation Reserves A/C- 40,000
(Reserve distributed)

A's Capital A/C Dr - 24,000
B's Capital A/C Dr - 18,000
C's Capital A/C Dr - 18,000
   To Workmen's Compensation Reserve A/c - 60,000
(Reserve distributed)

Workmen's Compensation Reserve A/c Dr - 40,000
   To A's Capital A/C Dr - 16,000
   To B's Capital A/C Dr - 12,000
   To C's Capital A/C Dr - 12,000
(Reserve distributed)

Correct Answer:

Workmen's Compensation Reserve A/c Dr - 40,000
   To A's Capital A/C Dr - 16,000
   To B's Capital A/C Dr - 12,000
   To C's Capital A/C Dr - 12,000
(Reserve distributed)

Explanation:

Reserve to be distributed =40,000
40,000 * 4/10 = 16,000 Cr
40,000 * 3/10= 12,000 Cr
40,000 * 3/10= 12,000 Cr

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