Ownclasses

On the retirement of Hari from the firm of 'Hari, Ram and Sharma' the balance-sheet showed a debit balance of Rs 12,000 in the profit and loss account. For calculating the amount payable to Hari this balance will be transferred
(a) to the credit of the capital accounts of Hari, Ram and Sharma equally
(b) to the debit of the capital accounts of Hari, Ram and Sharma equally
(c) to the debit of the capital accounts of Ram and Sharma equally
(d) to the credit of the capital accounts of Ram and Sharma equally

Answer

Answer is option b. Since at the time of retirement of a partner, the profit and loss account balance is transferred to the old partner’s capital account in their old profit sharing ratio, the debit balance of profit and loss account is to be transferred to the debit of the capital accounts of Hari, Ram and Sharma equally.