Question

A and B are partners sharing profits in the ratio of 4 : 3 . Their Balance Sheet as at 31st March, 2018 stood as:
They decided that with effect from 1st April, 2018, they will share profits and losses in the ratio of 2 : 1 . For this purpose they decided that:
(i) Fixed Assets are to be depreciated by 10%.
(ii) A Provision for Doubtful Debts of 6% be made on Sundry Debtors.
(iii) Stock be valued at ₹ 1,90,000.
(iv) An amount of ₹ 3,700 included in Creditors is not likely to be claimed.
Partners decided to record the revised values in the books. However, they do not want to disturb the Reserve. You are required to pass journal entries , prepare Capital Accounts of Partners and the revised Balance Sheet.

Answer 1

A's Share = $\frac{4}{7}$-$\frac{2}{3}$ =-  $\frac{2}{21}$

B's Share = $\frac{3}{7}$ - $\frac{1}{3}$  =  $\frac{2}{21}$

Explanation:

Calculation of sacrificing Ratio

Old Ratio (A and B) =4:3

New Ratio  (A and B)= 2: 1

Sacrificing Ratio =Old ratio - New ratio

A's Share = $\frac{4}{7}$-$\frac{2}{3}$ =-  $\frac{2}{21}$

B's Share = $\frac{3}{7}$ - $\frac{1}{3}$  =  $\frac{2}{21}$

Adjustment of general purpose

A's Capital A/c = 42,000 ×$\frac{2}{21}$ = 4,000(Dr)

B's Capital  A/c= 42,000 × $\frac{2}{21}$ = 4,000(Cr)