A B and C shared profits and losses equally They mutually decided to change their profit-
sharing ratio to 5 2 2 respectively. On the date of the change in the ratio, they had the following
undistributed profits which need to be adjusted because of the change in their ratio
(1) General Reserve
48.000
(2) Contingency Reserve
96.000
O Profit & Los Account Credit Balance
132,000
(iv) Joint Life policy
Give one entry for all profits and reserves to make the necessary adjustments
Ans. A Debit 71.000, B Credit 14,200. Credit
c credit 56800
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Answer: old profit sharing ratio is 5:2:2 and new profit sharing ratio is 1:1:1
os their sarifying ratio is 14:5:5 so General reserve is ditributed in sarifying
ratio and CR,P&L ACCOUNT, distributed in sarifying ratio.
Explanation:
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