Deep, Ishwar and Mukesh were partners in a firm sharing profits and losses in the ratio of5:3:2
From 1st April, 2020 they decided to share profits cqually. The revaluation of assets as
Pre-assessment of liabilities resulted in a profit of 3 10,000. The goodwill of the firm on it
reconstitution was valued at 1,20,000. The firm had a balance of 30,000 in general reserve.
Showing your workings clealy, pass journal entries on the reconstitution of the firm.
Answers
Answer:
(a) Revaluation a/c....................... Dr. ₹3,10,000
To Deep a/c. ₹1,55,000
To Ishwar a/c. ₹93,000
To Mukesh a/c. ₹62,000
(Being profit on revaluation distributed among partners on their old ratio)
(b) General Reserve a/c............. Dr. 30,000
To Deep a/c. ₹15,000
To Ishwar a/c. ₹9,000
To Mukesh a/c. ₹6,000
(Being general reserve distributed among partners on their old ratio)
(c) Inswar's Capital (₹1,20,000×1/30) Dr ₹4,000
Mukesh's Capital (₹1,20,000×4/30)Dr ₹16,000
To Deep's Capital(₹1,20,000×5/30). ₹20,000
(Being Deep's share of goodwill adjusted by gaining partners on their gaining ratio)
Explanation:
Deep is the only sacrificing partner
Ishwar and Mukesh are gaining partner. Their ratio is 1:4.