A, B and C shared profits and losses in the ratio of 5:3:2. They took out a Joint Life Policy in 2020 for 50,000, a premium of 3,000 being paid…
CA Foundation · Accounting · MTP · January 2025
A, B and C shared profits and losses in the ratio of 5:3:2. They took out a Joint Life Policy in 2020 for 50,000, a premium of 3,000 being paid annually on 10th June. The surrender value of the policy on 31st December of various years was as follows: 2020 Nil 2021900 20222,000 20233,600 A retired on 15 th April, 2024 and the policy was surrendered. You are required to prepare Joint Life Policy Account from 2020 to 2024 (assuming the Policy Account is maintained at surrendered value basis).
Suggested Answer and Working Notes:
Joint Life Policy Account Particulars ₹ ₹ 10 th June, 2020 To Bank Account 3,000 31 st Dec.,2020 By Profit and Loss A/c 3,000 10 th June, 2021 To Bank Account 3,000 31 st Dec.,2021 By Profit and Loss A/c 2,100 31 st Dec.,2021 By Balance c/d 900 3,000 3,000 1 st January, 2022 To Balance b/d 900 31 st Dec.,2022 By Profit and Loss A/c 1,900 10 th June, 2022 To Bank Account 3,000 31 st Dec.,2022 By Balance c/d 2,000 3,900 3,900 1 st January, 2023 To Balance b/d 2,000 31 st Dec.,2023 By Profit and Loss A/c 1,400 10 th June, 2023 To Bank Account 3,000 31 st Dec.,2023 By Balance c/d 3,600 5,000 5,000 1 st January, 2024 To Balance b/d 3,600 15 th April, 2024 By Bank 3,600 3,600 3,600
Topics: Retirement of a Partner
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