A, B and C are partners sharing profits in the ratio of 5 : 3 : 2. They decided to share future profits in the ratio of 2 : 3 : 5. What will be the accounting treatment of the Workmen Compensation Reserve appearing in the Balance Sheet on that date when no other information is available for the same?
A, B and C are partners sharing profits in the ratio of 5 : 3 : 2. They decided to share future profits in the ratio of 2 : 3 : 5. What will be the accounting treatment of the Workmen Compensation Reserve appearing in the Balance Sheet on that date when no other information is available for the same?
a) Distributed among partners in their capital ratio
b) Distributed among partners in their new profit-sharing ratio
c) Distributed among partners in their old profit-sharing ratio
d) Carried forward to new Balance Sheet
Anurag Pathak Changed status to publish May 5, 2023
Ans – c)
Explanation:-
In the absence of any information, workmen’s compensation reserve is distributed among partners in the old profit-sharing ratio.
Anurag Pathak Changed status to publish May 3, 2023
