Question

A and B who are presently sharing profits and losses in the ratio of 5 : 3 , decide to admit C as a new partner and to share future profits and losses in the ratio of 4:3:3. Give the Journal entry to distribute ‘Workmen Compensation Reserve’ of Rs. 90,000 when: (i) no information is given. (ii) When Workmen Compensation claim is Rs 30,000. (iii) When Workmen Compensation claim is Rs 90,000. (iv) When Workmen Compensation claim is Rs 1,20,000.

Answer 1

Answer:

X,Y and Z 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 Rs. 1,20,000 at the time of change in profit-sharing ratio, when there is a claim of Rs. 80,000 against it.