Partnership account ppt

partnership accounting powerpoint presentation and partnership dissolution accounting ppt
Dr.NishaGupta Profile Pic
Dr.NishaGupta,India,Teacher
Published Date:25-07-2017
Your Website URL(Optional)
Comment
Partnership Accounts Joint Life Policy (JLP) CPT Section A Fundamentals of Accountancy Chapter 8 Unit-4&5 Prof. Deepak Jaggi Learning Objectives (1) Understand the meaning of JLP (2) Understand the Implication of Excess Money Received on Death of a Partner from JLP (3) Understand the meaning of Surrender Value (4) To Lay a foundation of accounting treatment of various Methods Joint Life Policy (JLP) Joint Life Policy is a policy taken in the joint names of all the partners The premium of this policy is paid by the firm Contd…. Joint Life Policy (JLP) Whenever any of the partner dies, the policy comes to an end and amount is received by the firm Policy amount including the bonus, if any belongs to the entire firm and not only to the deceased partner Methods of Accounting Method 1 :- When Premium paid is treated as an expenses Method 2: When premium paid is treated as an asset Method 3: When premium paid is treated as an asset and JLP reserve created Method Method – I: Full Premium paid = Expense = Debited to P&L A/c 1) For Payment of Premium JLP Premium A/c …….. Dr. To Cash / Bank A/c 2) For Transfer Profit and Loss A/c …………….. Dr. To JLP Premium A/c Contd….. Method – 1 Conti.. 3) On Maturity of policy / Death of Partner Cash / Bank A/c …………… Dr. To Joint Life Policy A/c 4) For transfer of Balance in Joint Life Policy A/c Joint Life Policy A/c …………………….. Dr. To All partners Capital A/c (Old Profit Sharing Ratio) Method - II Premium Paid = Expense but after considering the Surrender Value 1) For the payment of Premium Joint Life Policy A/c …………. Dr. To Cash / Bank A/c 2) For Transfer Profit and Loss A/c …………. Dr. To JLP A/c (Diff. between Premium and Surrender Value) Contd… Method II Conti.. 3). At time of Maturity: Bank A/c ………………… Dr. To Joint Life Policy A/c 4. For Transfer of Balance in Joint Life Policy A/c. Joint Life Policy A/c ……………………. Dr. To All partner’s Capital A/c ( Old Profit Sharing Ratio) Contd… Method III Surrender Value Considered and Premium Paid = JLP Reserve Created At the end of every year , an amount equal to the premium paid is transferred from the Profit and Loss appropriation A/c to JLP Reserve A/c. JLP is brought down every year to its surrender value by transferring the difference to JLP Reserve A/c This ensure that at the end of every year, the surrender value of policy appears on the asset side and the same amount appeas on the liability side in JLP Reserve A/c Contd… Method III Conti.. 1) On Payment of Premium Joint Life Policy A/c …………………… Dr. To Cash /Bank A/c 2) For Creation of reserve Profit and Loss Appropriation A/c…………. Dr. To Joint Life Policy Reserve A/c 3) For amount in excess of surrender value Joint Life Policy Reserve A/c ……………….. Dr. To Joint Life Policy A/c Note: In the balance sheet JLP will appear on the Asset and JLP Reserve will appear on the liability side at surrender value. Contd… Method III Conti.. 4) At the time of maurity Bank A/c …………………… Dr. To Joint Life Policy A/c 5) For transfer of balance in reserve A/c to Policy A/c Joint Life Policy Reserve A/c…………. Dr. To Joint Life Policy A/c Note: Alternatively JLP Reserve can be directly transferred to Partner’s Capital A/c and JLP policy also. 6) For transfer of Balance of Joint Life Policy Joint Life Policy A/c …………………… Dr. To Partner’s Capital A/c Contd… Multi Choice Questions (M.C.Q) Q.1. Joint Life Policy is taken by the firm on the life(s) of ______ a) All the partners jointly (b) All the partners severely c) On the life of all the partners and employees of the firm. d) (a) and (b) Ans. d) (a) and (b) MCQ’s MCQ.1 Q.1. X, Y and Z takes a Joint Life Policy after five years Y retires from the firm. Old profit sharing ratio is 2:2:1. After retirement X and Z decides to share profits equally. They had taken a JLP of ₹2,50,000 with the surrender value ₹50,000 , what will be the treatment in the partner’s capital account on receiving the JLP amount if joint life premium is fully charged to revenue as & when paid? a) ₹50,000 credited to all the partners in old ratio (b) ₹2,50,000 credited to all the partners in old ratio c) ₹2,00,000 credited to all the partners in old ratio d) No treatment is required Ans. a) ₹50,000 credited to all the partners in old ratio MCQ.2 Q.2. X, Y and z takes a Joint Life Policy , after 5 years Y retires from the firm. Old profit sharing ratio is 2:2:1. After retirement X and Z decides to share profits equally. They had taken a JLP of ₹2,50,000 with the surrender value ₹50,000 . What will be the treatment in the partner’s capital account on receiving the JLP amount, if the JLP is maintained at the surrender alongwith the reserve? a) ₹50,000 credited to all the partners in old ratio (b) ₹2,50,000 credited to all the partners in old ratio c) ₹2,00,000 credited to all the partners in old ratio d) Distributed JLP Reserve Account in old profit sharing ratio. Ans. d) Distributed JLP Reserve Account in old profit sharing ratio. MCQ.3 Q.3. X, Y and Z were partners sharing profits and losses in the ratio of 3:2:1. X retired and firm received the joint life policy as ₹7,500 appearing in the balance sheet at ₹10,000 . Joint Life Policy is credited and cash debited with ₹7,500 , what will be the treatment for the balance in Joint Life Policy ? a) Credited to partner’s current account in profit sharing ratio. (b) Debited to revaluation account. c) Debited to partner’s capital account in profit sharing ratio. d) Either (b) or (c). Ans. d) Either (b) or (c) MCQ.4 Q.4 X, Y and Z are partners sharing profits and losses in the ratio 9:4:3 . They took joint life policy of ₹25,000 for X, ₹20,000 for Y and ₹51,000 for Z. What is the share of Z in the Joint Life Policy amount? a) ₹18,000 (b) ₹25,000 c) ₹51,000 d) ₹20,000 Ans. a) ₹18,000 MCQ.5 Q.5. X, Y and Z are the partners sharing profits and losses in the ratio 2:1:1 . Firm has a joint life policy of ₹1,20,000 and in the balance sheet it is appearing at the surrender value i.e. ₹20,000. On the death of X, how this Joint Life Policy will be shared among the partners. a) 50,000 : 25,000 : 25,000 (b) 60,000 : 30,000 : 30,000 c) 40,000 : 35,000 : 25,000 d) Whole of ₹1,20,000 will be paid to X. Ans. a) 50,000 : 25,000 : 25,000 MCQ.6 Q.6. To provide funds to pay to the retiring partner or to the representatives of a deceased partner, generally partners : a) Created a Sinking Fund (b) Create Joint Life Policy c) Create Reserve Fund d) Create a separate Bank Account Ans. b) Create Joint Life Policy

Advise: Why You Wasting Money in Costly SEO Tools, Use World's Best Free SEO Tool Ubersuggest.