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.
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
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