02. P, Q and R are partners sharing profits in the ratio of 2:34. It was decided that with effect from
1.4.2020, the profit sharing ratio will be 4:3:2. Following appear in the Balance sheet as at 31.3.2020:
a) General Reserve ? 40,000
b) Profit and Loss Account 20,000
c) Advertisement Suspense Account ? 15,000
Also Profit resulting from revaluation of assets and reassessment of liabilities came out to be ? 9,000
and Firm's Goodwill is valued at 18,000,
You are required to record the effect of the above transactions without affecting their book values by
passing a single journal entry.
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Calculation of Share of profits
P's Share -3,50,000*5/10 = 1,75,000
Q's share - 3,50,000*4/10 = 1,40,000
R's share - 3,50,000*1/10 = 35,000
R's guaranteed share is 50,000. So,the deficiency of 15,000 (50,000-35,000) is to be contributed by P and Q in the ratio of 3:2
P's contribution = 15,000*3/5=9,000
Q's contribution= 15,000*2/5 =6000Journal entry is as follows:-
P's capital A/c Dr 9,000
Q's capital A/c Dr 6,000
To R's capital A/c 15,000
(Being deficiency contributed by partners)
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