Balance of R,H & M sharing profits & losses in the ratio 2:3:2 stood as R - 10,000; H - 15,00,000; M - 10,00,000; Joint Life Policy 3,50,000 H desired to retire from the firm and the remaining partners decided to carry on with the future profit sharing ratio of 3:2 Joint policy of the partners surrendered and cash obtained 3,50,000 What would be the treatment for JLP A/c?

3,50,000 credited to partner's capital account in new ratio.

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3,50,000 credited to partner's capital account in old ratio.

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3,50,000 credited to partner's capital account in capital ratio.

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3,50,000 credited to JLP account

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Solution

The correct option is D 3,50,000 credited to JLP account
A Joint Life Policy (JLP) is an insurance policy which is taken out by the partnership firm on the joint lives of all the partners. The amount of policy is payable by the Insurance Company either on the death or on maturity of policy, whichever is earlier. The firm pays annual premium to the insurer against the policy.
The journal entry when joint life policy of the partners surrendered and cash obtained is:
Bank A/c Dr. 350000
To joint life policy A/c 350000

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A, B. and C are partners in a firm sharing profits in the ratio of 3:2:1 B retires. The goodwill of the firm is valued at Rs. 60,000 and the remaining partners A and C continue to share profits in the ratio of 3:1. By what amount will the capital account of B will be credited =

Q. Balances of

R_{1}, R_{2}

R_{3}

sharing profits & losses in proportion to their capitals, stood as:

R_{1} = R s . 3, 00, 000

R_{2} = R s . 2, 00, 000

R_{3} = R s . 1, 00, 000

R_{1}

desired to retire from the firm and the remaining partners decided to carry on, joint life policy of the partners surrendered and cash obtained Rs. 60,000. What will be the treatment for Joint Life Policy A/c?

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