Question

(a) X, Y and Z are partners sharing profits and losses in the ratio of 5 : 3 : 2. They decide to admit W for 1/6th share. Following is th extract of the Balance Sheet on the date of admission:
(b) A and B were partners in a firm sharing profit in 4 : 3 ratio. On 1st April, 2018, they admitted C as a new partner. On the date of C’s admission, the Balance Sheet of A and B showed a General Reserve of ₹ 84,000 and a debit balance of ₹ 8,400 in the Profit and Loss Account Pas necessary journal entries for the treatment of these items on C’s admission.
(c) Give the journal entries to distribute Workmen Compensation Reserve of ₹ 72,000 at the time of admission of Z, when there is no claim against it. The firm has two partners X and Y.
(d) Give the journal entries to distribute Workmen Compensation Reserve of ₹ 72,000 at the time of admission of Z, when there is claim of ₹ 48,000 against it. The firm has two partners X and Y.
(e) Give the journal entry to distribute Investment Fluctuation Reserve of ₹ 24,000 at the time of admission of Z, when Investment (Market Value ₹ 1,10,000 ) appears at ₹ 1,20,000. The firm has two partners X and Y.
(f) Give the journal entry to distribute General Reserve of ₹ 4,800 at the time of admission of Z, when 20% of General Reserve is to be transferred to Investment Fluctuation Reserve. The firm has two partners X and Y.
(g) A, B and C were partners sharing profits and losses in the ratio of 6 : 3 : 1. They decide to take D into partnership with effect from 1st April, 2018. The new profit-sharing ratio between A, B, C and D will be 3 : 3 : 3 : 1. They also decide to record the effect of the following without affecting their book values, by passing a single adjustment entry:
Pass the necessary single adjustment entry, through the Partner’s Current Account.

Answer 1

The necessary single adjustment entry are calculated below:

Explanation:

Calculation of Sacrifice or Gain

Old Ratio $(\mathrm{A}, \mathrm{B} \text { and } \mathrm{C})=6: 3: 1$

New Ratio $(\mathrm{A}, \mathrm{B}, \mathrm{C} \text { and } \mathrm{D})=3: 3: 3: 1$

Sacrificing (or Gaining Ratio) = Old Ratio - New Ratio

$A^{\prime} s=\frac{6}{10}-\frac{3}{10}=\frac{3}{10}(\text { Sacrifice })$

$B^{\prime} s=\frac{3}{10}-\frac{3}{10}=Nil$

$C^{\prime} s=\frac{1}{10}-\frac{3}{10}=-\frac{2}{10}(\text { Gain })$

$D^{\prime} s=0-\frac{1}{10}=-\frac{1}{10}(\text { Gain })$

Calculation and Adjustment of Net Effect

Credit A's Current Acoount

$=1,80,000 \times \frac{3}{10}=54,000$

Debit C's Current Aocount

$=1,80,000 \times \frac{2}{10}=36,000$

Debit D's Current Aocount

$=1,80,000 \times \frac{1}{10}=18,000$