Multiple choice

If the joint life policy is not appearing in the books and the firm decides not to show it in the books, what should be the treatment when A is retiring from the firm where A, B and C were partners sharing profits in the ratio 2 : 1 : 3. The policy is of Rs. 3, 00,000 and surrender value is Rs. 30,000?

  1. B and C will be debited with Rs. 1, 00,000 and Rs. 50,000, and A will be credited with Rs. 1, 50,000.

  2. B and C will be credited with Rs. 10,000 and Rs. 5,000, and A will be debited with Rs. 15,000.

  3. B and C will be debited with Rs. 1, 00,000 and Rs.1, 50,000, and A will be credited with Rs. 50,000.

  4. B and C will be debited with Rs. 10,000 and Rs. 5,000, and A will be credited with Rs. 15,000.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

This is the correct treatment. A is sacrificing while B and C are gaining. So, A should be credited with gain from surrender value.

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