Question

A, B and C who are presently sharing profits and losses in the ratio of 5 : 3 : 2 decide to share future profits and losses in the ratio of 2 : 3 : 5 . Give the journal entry to distribute Workmen Compensation Reserve of ₹ 1,20,000 at the time of change in profit-sharing ratio, when:
(i) no information is given.
(ii) there is no claim against it.

Answer 1

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I don't know ask anyone else

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Answer 2

Solution:

Case : (i) and (ii)  

                                                      Journal  

Particulars                                                      Debit Rs.          Credit Rs.

Workmen Compensation Reserve A/c   Dr.  1,20,000

     To A's Capital A/c                                                               60,000

     To B's Capital A/c                                                               36,000

     To C's Capital A/c                                                               24,000

(Being Workmen Compensation Reserve distributed)  

Note: Workmen Compensation Reserve should be distributed in the old ratio i.e. 5 : 3 : 2 in both the cases (i) and (ii).