Question

A, B and C are partners in a firm sharing profits in the ratio of 5:3:2, whose books are closed every year on 31st March. They are producing goods that can be purchased by low income group. They decided to Charge their profit sharing ratio in 2:3:5 w.e.t 1st april. They decided to record the effect of the following

without affecting book figures
General Reserve rs 50,000

contingeney Reserve Rs 5,000
Profit md loss a/c (dr) rs 10000


Advertisement suspense rs 15000
Pass the necenary Journal entry​

Answer 1

Answer:

ANSWER

1. 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)