Question

Q. 31. X, Y and Z were sharing profits and losses in the ratio of 5:3:2. They
decided to share future profits and losses in the ratio of 2 : 3:5 with effect from
1.4.2017. They decided to record the effect of the following, without effecting their book values
p&l account 24000
advertising suspence account 12000​

Answer 1

Answer:

Z's Capital a/c..............Dr.   70200

To X's Capital a/c                             70200

(Being adjustment entry passed)

Working notes:

1. Amount to be distributed = general reserve + P and L a/c - advertisement suspense

= 6000 +240000 -12000 = 234000

2. Calculation of sacrifice and gain

X: 2/10-5/10 = (3/10) sacrifice

Z: 5/10 - 2/10 = 3/10 gain

Explanation:

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