Question : When the Retiring Partner is to be paid through amount brought by the remaining partners in a manner to make their capitals proportionate to their New Profit-sharing Ratio. Arrange the following steps in proper sequence
I. Calculate Adjusted Capital of remaining partners after adjustments.
II. Calculate Total Capital of the new firm as follows:
Aggregate of adjusted capital of remaining partners + Shortage of amount to be brought in by continuing partners to pay the retiring partner
III. Find Surplus Capital/Deficit Capital of each continuing partner by comparing New Capital with the Adjusted Old Capital
IV. Calculate New Capital of remaining partners by dividing Total Capital of the new firm in their New Profit-sharing Ratio.
Option 1: I,II,III,IV
Option 2: I,III,IV,II
Option 3: I,II,IV,III
Option 4: IV,III,II,I
Correct Answer: I,II,IV,III
Solution : Answer = I, II, IV, III
The correct sequence of steps, when a Retiring Partner is to be paid through amounts brought by the remaining partners to make their capitals proportionate to their New Profit-sharing Ratio, is:
- Calculate the Adjusted Capital of remaining partners after adjustments.
- Find the Surplus Capital/Deficit Capital of each continuing partner by comparing the New Capital with the Adjusted Old Capital.
- Calculate the New Capital of the remaining partners by dividing the Total Capital of the new firm by their New Profit-sharing Ratio.
- Calculate the Total Capital of the new firm by adding the Aggregate of the adjusted capital of remaining partners with a Shortage of the amount to be brought in by continuing partners to pay the retiring partner.
Hence, the correct option is 3.
Related Questions
Trending Articles/News
