Practicing Success
Practicing Success
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P and T are partners sharing profits and losses in the ratio of 3: 2. They admitted R for 1/5th share. General Reserve appeared in the books at ₹ 45,000. New profit sharing ratio among partners is 5: 3: 2. General Reserve will be treated as follows: |
General Reserve will appear in the New Books. General Reserve will be distributed 5:3:2 among all members. General Reserve will be distributed in the Ratio of 3:2 among old partners. General Reserve will be distributed in the ratio of 5:3 among old partners. |
General Reserve will be distributed in the Ratio of 3:2 among old partners. |
| Sometimes a firm may have accumulated profits not yet transferred to capital accounts of the partners. These are usually in the form of general reserve, reserve and/or Profit and Loss Account. The new partner is not entitled to have any share in such accumulated profits. These are distributed among the partners by transferring it to their capital current accounts in old profit sharing ratio. Similarly, if there are some accumulated losses in the form of a debit balance of profit and loss account and/or deferred revenue expenditure appearing in the balance sheet of the firm. |
