Question

A,B and C are partners sharing profits and losses in the ratio of 2:3:4 They decided to share
future profits and losses in the ratio of 4:3;2 they also decided to record the effect of the
following without affecting their book value:
General reserve
Rs. 40,000
Profit and Loss a/c
Rs. 20,000
Advertisement suspense Alc
Rs. 15,000
You are required to give the necessary single journal entry.
(4)​

Answer 1

Answer:

When the partners do not want to distribute the accumulated profit and losses the treatment Is done as follow

sacrifice or gain (old ratio - new ratio )

A = 2/9-4/9=2/9 (gain)

B = 3/9-3/9=0

C= 4/9-2/9=2/9 (sacrifice)

General reserve = 40000

(+)profit and loss = 20000

total. =. 60000

(-) advertisement

suspense. = 15000

balance. = 45000

(general reserve and profit and loss had credit balance so we add the both and advertisement suspense has debit balance so we subtract it )

A share in 45000×2/9= 10000

c share in 45000×2/9= 10000

Single journal entry

A 'capital account. Dr 10000.

To C 's capital account. 10000