At the time of final payment to retiring partner, which of the following adjustment/s is/are necessary in the capital accounts ?
The correct option is C All of the above
The following adjustments are
necessary at the time of final payment to retiring partner:
1. Transfer of reserves
2. Transfer of goodwill
3. Transfer of profit and loss
on revaluation
After the adjustment of the
above mentioned items, the capital account balance standing to the credit of
the retiring partner represents amount to be paid to him.
The continuing partners may
discharge the whole claim at the time of retirement. Then the journal entry
will be as follows:
Retiring Partner's capital
A/c Dr.
To Bank A/c
Sometimes the retiring partner
agrees to retain some portion of his claim in the partnership as loan. The
journal entry will be as follows:
Retiring Partner's
Capital A/c Dr.
To Retiring Partner's Loan A/c
To Bank A/c
The following adjustments are necessary at the time of final payment to retiring partner:
1. Transfer of reserves
2. Transfer of goodwill
3. Transfer of profit and loss
on revaluation
After the adjustment of the
above mentioned items, the capital account balance standing to the credit of
the retiring partner represents amount to be paid to him.
The continuing partners may
discharge the whole claim at the time of retirement. Then the journal entry
will be as follows:
Retiring Partner's capital A/c Dr.
To Bank A/c
Sometimes the retiring partner agrees to retain some portion of his claim in the partnership as loan. The journal entry will be as follows:
Retiring Partner's Capital A/c Dr.
To Retiring Partner's Loan A/c
To Bank A/c
