30. A Band C are partner sharing profits in the ratio of 1:2:3 On 1-4-2019 they decided to share the profits equally. On the date there was a credit balance of 1,20,000 in their Profit and Loss Account and a balance of 1,80,000 in a General Resene Account. Instead of closing the General Reserve Account
and Profit and Loss Account, it is decided to record an adjustment entry for the same. In the necessary adjustment entry to give effect to the above arrangement:
(A) Dr. Aby 250,000, C. B by 50,000
(B) CH. A by 50,000: Dr. B by 30,000
(C) Dr. A by 150,000, C. Cby 250,000
(D) Gr. A by 50,000, Dr. Cby 50,000
Answers
Answer:
The answer is D.
Explanation:
The old ratio: 1: 2: 3: 1/6 : 2/6 : 3/6
The new ratio: 1: 2: 3: 1/3 : 1/3 : 1/3
A = 1/6 - 1/3 = 1-2/6 = 1/6 (Gain)
B = 2/6 - 1/3 = 2-2/6 = 0
C = 3/6 - 1/3 = 3-2/6 = 1/6 (Sacrifice)
Therefore, the answer is D
Answer:
To get the adjustment entry done, first need to find out the distribution of accumulated profit /loss. Since books of account are not to be affected due to change in profit sharing ratio , hence an adjustment entry need to be passed:
Below are the accumulated profits need to be distributed:
Particulars Book Value
Profit & Loss A/c 15000
General Reserve 60000
Advertising Suspense A/c 30000
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Total Surplus 105000
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Share in Accumulated Profits: A B C
As per old Ratio 52500 31500 21000
As per New Ratio 21000 31500 52500
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(Sacrifice)/Gain (31500) NIL 31500
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Hence below adjustment entry will be passed:
C's Capital A/c Dr. 31500
To A's Capital A/c 31500