Question

Sudha, Pushpa and Sneh are partners in a firm sharing profit in the ratio of 3:3:2. They decided to share profits equally w.e.f April 1, 2003. On that date, the Profit and Loss account showed the credit balance of Rs. 24,000. Instead of closing the Profit and Loss account, it was decided to record an adjustment entry reflecting the change in the profit sharing ratio. Show that entry.​

Answer 1

Explanation:

if profit and loss show credit balance, it is a profit for the organisation.

therefore the profit for the year is 24000

let's first calculate the shares of profit to each partner.

sudha:

$\frac{3}{8} \: (where \: 8 = 3 + 3 + 2)$

Pushpa:

$\frac{3}{8}$

sneh:

$\frac{2}{8}$

now the ratio are to be transferred into the profit

$\frac{3}{8} \times 24000 = 9000$

the profit for sudha and pushpa is 9000

now profit for sneh

$\frac{2}{8} \times 24000 = 6000$

the journal entry is as follows

31/3/2004 Profit and loss a/c Dr 24000

To sudha capital/

current a/c 9000

To Pushpa capital/

current a/c 9000

To sneh capital/

current a/c 6000

( being share of profit in the ratio 3:3:2)

hope my answer helps u