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Difference Between National Income and Private Income

In the event of an investor’s loss or death, remaining partners may adjust their capital contributions according to their profit-sharing ratio (PSR). The total capital of the business is divided among continuing partners based on the new profit-sharing ratio (NPSR), addressing any surplus or deficit in their capital accounts. Excess capital taken out by a partner is recorded with journal entries, ensuring proper adjustments are made. For detailed scenarios and explanations, refer to Eduacademy for Class 12 Commerce students.

be recorded in such a case :

For excess capital withdrawn by the partner
Partners’ Capital A/cDr.
To Cash / Bank A/c
For the amount of capital to be brought in by the partner
Cash / Bank A/cDr.
To Partners’ Capital A/c

(The above mentioned Journal entries are fetched from NCERT website)

Contemplate the following scenarios:

The modification of the continuing partner’s capitals may incorporate in the following way :

  • When the capital of the new enterprise as determined by the partners is stated

The above mentioned is the concept that is explained in detail about the Adjustment of Partner’s Capital for the Class 12 Commerce students. To know more, stay tuned to Eduacademy.

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