Question

How to adjust capitals of partners according to new profit sharing ratio by opening current accounts of the partners?

Answer 1

Answer:

in admission we have two methods to adjust the partners capital.

1. when admitting partner capital information is given

2. when admitting partner capital information is not given.

1st method eg. A admitted for 1/4th share and brought 50,000 as his share of capital

then firm capital = 50,000 *4/1=2,00,000

this firm capital distribute to all the partners debit side of partners capiatl a/c and balancing figure is called as to current account or by current account