Question

12. A, B and C who are presently sharing profits and losses in the ratio of 5:3:2 decide to share future
profits and losses in the ratio of 2:3:5. Give the Journal entry to distribute 'Workmen Compensation
Reserve' of 1,20,000 at the time of change in profit-sharing ratio, when:
( no other information is given;
(ii) there is no claim against it.​

Answer 1

Answer:

Investment Fluctuation Reserve A/c.......Dr. 5000

To Investments A/c 5000

(Being decrease in the market value of the investments adjusted with the reserve)

2. Investment Fluctuation Reserve A/c.......Dr. 15000

To X's Capital A/c 7500

To Y's Capital A/c 4500

To Z's Capital A/c 3000

(Being the balance in investment fluctuation reserve distributed in the old ratio)