Question

A, B and C were partners sharing profits in the ratio of 5:4: 3. They
decided to change their profit sharing ratio to 2 : 2 :1 w.e.f. 1st
April, 2019. On that date, there was a balance of * 3,00,000 in General
Reserve and a debit balance of * 4,80,000 in the Profit and Loss
Account.Pass necessary journal entries for the above on account of change in the profit sharing ratio​

Answer 1

Answer:

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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

------------- --------------- ---------------

Hence below adjustment entry will be passed:

C's Capital A/c Dr. 31500

To A's Capital A/c 31500

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