X, Y and Z were partners sharing profits in the ratio of 3:2:1. Y retires, X and Z have agreed that the capital of the new firm will be fixed at $ 2,00,000 in the profit sharing ratio. The Capital Accounts of X and Z shows a balance of $ 1,67,500 and $ 45,000 respectively on the date of retirement after making all the adjustments. Show the adjustment of Capital Account if: (a) Adjustment to be made through cash, i.e. excess/deficit amount may be paid off or brought in by the remaining partners or (b) Adjustment of Capital is to be made by opening Current Accounts.

X, Y and Z were partners sharing profits in the ratio of 3:2:1. Y retires, X and Z have agreed that the capital of the new firm will be fixed at $ 2,00,000 in the profit sharing ratio. The Capital Accounts of X and Z shows a balance of $ 1,67,500 and $ 45,000 respectively on the date of retirement after making all the adjustments. Show the adjustment of Capital Account if: (a) Adjustment to be made through cash, i.e. excess/deficit amount may be paid off or brought in by the remaining partners or (b) Adjustment of Capital is to be made by opening Current Accounts.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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