Coupon Accepted Successfully!


Treatment of Undistributed Profits and Accumulated Losses

All the balances of accumulated reserves, funds and undistributed amount of profit or loss appearing in the Balance Sheet of the firm on the date of retirement are distributed amongst all the partners including the retiring partner in their old profit sharing ratio.

The journal entries for distribution are the same as discussed in ‘Admission of Partner’. If the continuing partners decide to show the reserves in the Balance Sheet, then the journal entry should be:

Illustration - 8


X, Y and Z were in a partnership sharing profits in the ratio of 5 : 3 : 2. X retired and the balance in reserve at the time of retirement of X was ₹ 20,000. Pass necessary journal entries if:

  • Partners decide to distribute the entire reserve
  • Partners decide to distribute only the retiring partner’s share
  • Partners decide to show entire amount of reserve in Balance Sheet and Y and Z share the gains equally



Journal entries

Test Your Skills Now!
Take a Quiz now
Reviewer Name