A and B were partners in a firm sharing profits and losses in the ratio of 4 : 3. They admitted C as a new partner. The new profit sharing ratio between A, B and C was 3 : 2 : 2. A surrendered 1⁄4 of his share in favour of C. Calculate B’s Sacrifice.
There are two ways of solution of the problem:
Way 1 :
A's sacrifice = A's Old ratio - A's New Ratio
= 4/7 - 3/7
= 1/7
B's sacrifice = C's Share - A's sacrifice
= 2/7 - 1/7
= 1/7
Way 2 :
B's sacrifice = B's Old share - B's New share
= 3/7 - 2/7
= 1/7
What is Capital Fund? How is it calculated?
What is sacrificing ratio? Why is it calculated?
If a fixed amount is withdrawn on the first day of every quarter, for what period the interest on total amount withdrawn will be calculated?
Why there is need for the revaluation of assets and liabilities on the admission of a partner?
What is subscription? How is it calculated?
List the items which may be debited or credited in capital accounts of the partners when:
(i) Capitals are fixed.
(ii) Capital are fluctuating.
Why is Profit and Loss Adjustment Account prepared? Explain.
If some goodwill already exists in the books and the new partner brings in his share of goodwill in cash, how will you deal with existing amount of goodwill?
Why it is considered desirable to make the partnership agreement in writing.
On what occasions sacrificing ratio is used?
State the accounting treatment at the time of dissolution of a firm for:
i. Unrecorded assets ii. Unrecorded liabilities
Why it is necessary to ascertain new profit sharing ratio even for old partners when a new partner is admitted?
Give two circumstances under which the fixed capitals of partners may change.
What is Capital Fund? How is it calculated?
In the absence of Partnership deed, specify the rules relating to the following :
(i) Sharing of profits and losses.
(ii) Interest on partner’s capital.
(iii) Interest on Partner’s drawings.
(iv) Interest on Partner’s loan
(v) Salary to a partner.
Why there is need for the revaluation of assets and liabilities on the admission of a partner?
If a fixed amount is withdrawn on the first day of every quarter, for what period the interest on total amount withdrawn will be calculated?
Identify various matters that need adjustments at the time of admission of a new partner.
State the difference between dissolution of partnership and dissolution of partnership firm.
List the items which may be debited or credited in capital accounts of the partners when:
(i) Capitals are fixed.
(ii) Capital are fluctuating.