Question

A, B and C were partners sharing profits & losses in the ratio of 5:3:2. They decided to

share future profits in the ratio of 2:3:5 with effect from 1st April 2018. They had

following balances in their balance sheet , pass necessary journal entry​

Answer 1

Explanation:

To get the adjustment entry done, first need to find out the distribution of accumulated profit /loss. Since books of account are not to be affected due to change in profit sharing ratio , hence an adjustment entry need to be passed:

Below are the accumulated profits need to be distributed:

Particulars Book Value

Profit & Loss A/c 15000

General Reserve 60000

Advertising Suspense A/c 30000

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Total Surplus 105000

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Share in Accumulated Profits: A B C

As per old Ratio 52500 31500 21000

As per New Ratio 21000 31500 52500

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(Sacrifice)/Gain (31500) NIL 31500

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Hence below adjustment entry will be passed:

C's Capital A/c Dr. 31500

To A's Capital A/c 31500