Attempt any ONE of the following two sub- parts i.e. either (i) or (ii): (i) Sam, Sarthak, Sara shared profits and losses in the ratio of 5:3:2.…
CA Foundation · Accounting · MTP · April 2025
Attempt any ONE of the following two sub- parts i.e. either (i) or (ii): (i) Sam, Sarthak, Sara shared profits and losses in the ratio of 5:3:2. They took out a Joint Life Policy in 2021 for 2,00,000, a premium of 12,000 being paid annually on 10th June. The surrender value of the policy on 31st December of various years was as follows:2021 Nil - 20223,60020238,000202414,400 Sam retired on 15th April, 2025 and the policy was surrendered. You are required to prepare Joint Life Policy Account from 2021 to 2025 (assuming the Policy Account is maintained at surrendered value basis). OR (ii) PQR Limited's Profit and Loss account for the year ended 31st March, 2025 includes the following information: (1) Liability for Income Tax 40,000 (2) Retained Profit - 2,00,000 (3) Proposed Dividend - 20,000 (4) Increase in Provision for Doubtful Debts - 25,000 (5) Bad Debts written off - 20,000 State which one of the items above is - (a) transfer to provisions; (b) transfer to reserves; and (c) neither related to provisions nor reserves.
Suggested Answer and Working Notes:
(a) (i) Joint Life Policy A/c Particulars ₹ ₹ 10 th June, 2021 To Bank A/c 12,000 31 st Dec.,2021 By Profit and Loss A/c 12,000 10 th June, 2022 To Bank A/c 12,000 31 st Dec.,2022 By Profit and Loss A/c 8,400 By Balance c/d 3,600 12,000 12,000 1 st January, 2023 To Balance b/d 3,600 31 st Dec.,2023 By Profit and Loss A/c 7,600 10 th June, 2023 To Bank A/c 12,000 31 st Dec.,2023 By Balance c/d 8,000 15,600 15,600 1 st January, 2024 To Balance b/d 8,000 31 st Dec.,2024 By Profit and Loss A/c 5,600 10 th June, 2024 To Bank A/c 12,000 31 st Dec.,2023 By Balance c/d 14,400 20,000 20,000 1 st January, 2025 To Balance b/d 14,400 15 th April, 2025 By Bank 14,400 14,400 14,400 (ii) (a) Transfer to provisions - (i), (iv) (b) Transfer to reserves - (ii) (c) Neither related to provisions nor reserves - (iii), (v).
Topics: Retirement of a Partner, Theoretical Framework
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