Practicing Success
How the profit for the intervening period for the retiring partner is calculated at the time of retirement of the partner by following approach of average profit? |
ACDB ABCD CABD CADB |
CABD |
If the partner's share of profit was to be calculated on the basis of average profits of the last few years, then calculate the total of the profits of last years and then divide it by the no of years to calculate the average profit. After it, partner's share of profit is calculated for the intervening period according to the partner's share on basis of average profit and at last journal entry is passed to transfer this share of profit. The Journal entry will be: |