When no specific information or agreement exists between partners, the share of profit belonging to a retiring or deceased partner is absorbed by the remaining partners according to the Old Profit Sharing Ratio. This ratio dictates how the remaining partners will distribute that share, based on the proportions established prior to the partner's departure or demise.
The Old Profit Sharing Ratio is defined as the proportion in which partners historically divided business profits and losses before a partner's retirement or death.
Consequently, the accurate response is (B): Old Profit Sharing Ratio.
Alexia Limited invited applications for issuing 1,00,000 equity shares of ₹ 10 each at premium of ₹ 10 per share.
The amount was payable as follows:
Applications were received for 1,50,000 equity shares and allotment was made to the applicants as follows:
Category A: Applicants for 90,000 shares were allotted 70,000 shares.
Category B: Applicants for 60,000 shares were allotted 30,000 shares.
Excess money received on application was adjusted towards allotment and first and final call.
Shekhar, who had applied for 1200 shares failed to pay the first and final call. Shekhar belonged to category B.
Pass necessary journal entries for the above transactions in the books of Alexia Limited. Open calls in arrears and calls in advance account, wherever necessary.