how to treat joint life policy in dissolution of partnership when surrender value is given ?
If Joint Life Policy (JLP) and Joint Life Policy Reserve (JLP Reserve) both are given in the Balance Sheet , then first of all transfer JLP to debit side and JLP Reserve to credit side of Realisation A/c and if Surrender Value is also given then the realised value (i.e. surrender value received from insurance company) will also be shown on the credit side of Realisation A/c (at surrender value). This entry will also be shown on the debit side of Bank A/c (double entry system of accounting).
JOURNAL ENTRIES:
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Date | Particulars | L.F. | Debit Amount Rs | Credit Amount Rs | ||
1. | Realisation A/c | Dr. |
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| To Joint Life Policy A/c |
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| (being the amount of Joint Life Policy transferred to Realisation a/c) |
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2. | JLP Reserve A/c | Dr. |
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| To Realisation A/c |
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| (being Joint Life Policy Reserve transferred to Realisation A/c) |
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3. | Bank A/c | Dr. |
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| To Realisation A/c |
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| (being surrender value received from insurance company) |
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