0.24.A, B and C sharing profits and losses in the ratio of 4:3:2. decide to share profits and losses in the ratio of 2:3:4 with effect from 1st April, 2016. Following is an extract of their Balance Sheet as at 31st March, 2016: Liabilities -Investment Fluctuation Reserve 54,000 Assets -Investments (At Cost) 6,00.000 Show the accounting treatment under the following alternative cases : Case (i) If there is no other information. Case (ii) If the market value of Investments is 36,00,000. Case (iii) If the market value of Investments is 75,91,000. Case (iv) If the market value of Investments is 5,28,000. Case (y) If the market value of Investments is 6,60,000.
Plz somebody help pe and answer this question. tell me the journey entry of this question
Answers
Case (i)
If there is no other information,
Investments Fluctuation Reserve A/c ... Dr - Rs 54,000
- To A's capital A/c - Rs 24,000
- To B's capital A/c - Rs 18,000
- To C's capital A/c - Rs 12,000
(Being Investments Fluctuation Reserve transferred to partners' capital a/c(s) in their old profit-sharing ratio.)
Case (ii)
If the market value of Investments is Rs 6,00,000,
Investments Fluctuation Reserve A/c ... Dr - Rs 54,000
- To A's capital A/c - Rs 24,000
- To B's capital A/c - Rs 18,000
- To C's capital A/c - Rs 12,000
(Being Investments Fluctuation Reserve transferred to partners' capital a/c(s) in their old profit-sharing ratio.)
Case (iii)
If the market value of Investments is Rs 5,91,000,
Investments Fluctuation Reserve A/c ... Dr - Rs 54,000
- To Investments A/c - Rs 9,000 [Rs 6,00,000 - Rs 5,91,000, the remaining (Rs 54,000 - Rs 9,000 will be distributed.)]
- To A's capital A/c - Rs 20,000
- To B's capital A/c - Rs 15,000
- To C's capital A/c - Rs 10,000
(Being excess Investments Fluctuation Reserve transferred to partners' capital a/c(s) in their old profit-sharing ratio.)
Case (iv)
If the market value of Investments is Rs 5,28,000,
Investments Fluctuation Reserve A/c ... Dr - Rs 54,000
Revaluation A/c ... Dr - Rs 18,000 [Rs 72,000 - Rs 54,000]
- To Investments A/c - Rs 72,000 [Rs 6,00,000 - Rs 5,28,000]
(Being fall in the value of investments adjusted.)
A's capital A/c ... Dr - Rs 8,000
B's capital A/c ... Dr - Rs 6,000
C's capital A/c ... Dr - Rs 4,000
- To revaluation A/c - Rs 18,000
(Being loss on revaluation transferred to partners' capital a/c(s) in their old profit-sharing ratio.)
Case (v)
If the market value of Investments is Rs 6,60,000,
Investments Fluctuation Reserve A/c ... Dr - Rs 54,000
- To A's capital A/c - Rs 24,000
- To B's capital A/c - Rs 18,000
- To C's capital A/c - Rs 12,000
(Being Investments Fluctuation Reserve transferred to partners' capital a/c(s) in their old profit-sharing ratio.)
Investments A/c ... Dr - Rs 60,000 [Rs 6,00,000 - Rs 60,000]
- To Revaluation A/c - Rs 60,000
(Being the value of investments brought up to the market value.)
Revaluation A/c ... Dr - Rs 60,000
- To A's capital A/c - Rs 26,667
- To B's capital A/c - Rs 20,000
- To C's capital A/c - Rs 13,333
(Being gain on revaluation transferred to partners' capital a/c(s).)