Question

Q. 25. A, B and C sharing profits and losses in the ratio of 4:3:2, decide to share
profits and losses in the ratio of 2:3:4 with effect from 1st April, 2016. Following is
an extract of their Balance Sheet as at 31st March, 2016:
Liabilities
Assets
Investment Fluctuation Reserve 54,000 Investments (At Cost)
6,00,000
Show the accounting treatment under the following alternative cases :
Case (i) If there is no other information.
Case (ii) If the market value of Investments is 6,00,000.
Case (iii) If the market value of Investments is 5,91,000.
Case. (iv) If the market value of Investments is 5,28,000.
Case (v) If the market value of Investments is 6,60,000.
[Ans. Case (i) and (ii) :Credit A's Capital A/c by 324,000, B's Capital A/C
by 18,000 and C's Capital A/c by 12,000.
Case (iii) : Credit A's Capital A/c by 320,000, B's Capital A/C
by 15,000 and C’s Capital A/c by 10,000.
Case (iv): Loss on Revaluation 518,000.
Debit A's Capital A/c by 58,000, B's Capital A/c by
6,000 and C's Capital A/c by 4,000.​

Answer 1

Case (iv): Loss on Revaluation 518,000.

Debit A's Capital A/c by 58,000, B's Capital A/c by

6,000 and C's Capital A/c by 4,000.

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