Question

R, S and T sharing profits and losses in the ratio of 1:2:3, decided to share future profit and losses equally. They also decided to adjust the following accumulated profits, losses and reserves without affecting their book figures, by passing a single adjustment entry:
General Reserve Rs.40,000; Profit and Loss A/c Rs.30,000; Advertisement Suspense Rs.10,000
The necessary adjustment entry will be:
(a) Dr. R and Cr. T by Rs.10,000
(b) Dr. T and Cr. R by Rs.10,000
(c) Dr. S and Cr. R by Rs.10,000
(d) Dr. R and Cr. S by Rs.10,000

Answer 1

Answer:

a) Dr R and Cr T

Explanation:

Find out sacrificing Ratio and Gaining Ratio.

Sacrificing Ratio = Old Psr - New Psr

The resultant figure will be either positive or negative or zero

if positive = It means Sacrifice

if Negative = it means Gain

if Zero = it means no gain no sacrifice

accounting entry will be..

Gaining Partner's Capital A/C dr

To Sacrificing Partner's Capital A/C

Answer 2

Answer:

The necessary adjustment entry will be:

Rs.13333.3 to be credited to Dr. R's Capital and  Rs.13333.3 to be debited to Dr. T's Capital

Explanation:

We have given,

General Reserve =  Rs.40,000

Profit and Loss A/c = Rs.30,000

Advertisement Suspense = Rs.10,000

The net amount to be adjusted = 40000 + 30000 + 10000

                                                    = Rs.80,000

The old ratio of sharing profits and losses = 1 : 2 : 3

The new ratio = 1 : 1 : 1

Dr. R's share as per old ratio $=\frac{80,000}{6} *1 = Rs.13333.3$

Dr. S's share as per old ratio $=\frac{80,000}{6} *2 = Rs.26666.6$

Dr. T's share as per old ratio $=\frac{80,000}{6} *3 = Rs.39999.9$

Dr. R's share as per new ratio $=\frac{80,000}{3} *1 = Rs.26666.6$

Dr. S' share as per new ratio $=\frac{80,000}{3} *1 = Rs.26666.6$

Dr. T's share as per new ratio $=\frac{80,000}{3} *1 = Rs.26666.6$

Amount of as per share's ratio:       R                    S                        T

As per old ratio :                   13333.3         26666.6         39999.9                

As per new ratio:                 26666.6         26666.6         26666.6

Dr. R will gain the amount = 26666.6 - 13333.3 = Rs.13333.3 (gain)

The amount gain/sacrifice by Dr. S = 26666.6 - 26666.6 = 0

Dr. T will lose amount  = 39999.9 - 26666.6 = Rs.13333.3 (loss)

Hence, the amount Rs.13333.3 needed to be credited to Dr. R's Capital. The amount Rs.13333.3 needed to be debited to Dr. R's Capital.