Question No: 4

a) Sara, Samah and Salima are partners in a firm. They are sharing profits and losses in the ratio of 2:3:1 respectively. Samah retires from the firm on 1st April 2019. After her retirement, her capital account shows a credit balance of RO 164,000 after the necessary adjustments made.

Required:

Explain the following options of settlement to the retiring partner with the relevant journal entries.

i. When the amount due is paid off immediately

ii. When the amount due is not paid immediately

iii. When 40% is paid at once and balance in future

b) Explain the following methods for calculating profit up to the date of death of a partner with your own examples:

i. Time basis method

ii. Turnover or Sales basis method

Question No: 4 10 Marks a) Sara, Samah and Salima are partners in a firm. They are sharing profits and losses in the ratio of 2:3:1 respectively. Samah retires from the firm on 1st April 2019. After her retirement, her capital account shows a credit balance of RO 164,000 after the necessary adjustments made. Required: Explain the following options of settlement to the retiring partner with the relevant journal entries. i. When the amount due is paid off immediately (2 Marks) ii. When the amount due is not paid immediately (2 Marks) iii. When 40% is paid at once and balance in future (2 Marks) b) Explain the following methods for calculating profit up to the date of death of a partner with your own examples: i. Time basis method (2 Marks) ii. Turnover or Sales basis method (2 Marks)