Question

Vinod, Sunita and Simran are partners in a firm sharing profits in the ratio of 3:2:1. They decided to share profits equally w.e.f April 1, 2014. On that date the profit and loss account showed the credit balance of Rs.60,000 and a balance of Rs.30,000 in general reserve. Instead of closing profit and loss account, it was decided to record an adjustment entry reflecting the change in the profit sharing ratio. Give necessary journal entry to give effect to the same.​

Answer 1

Explanation:

Old Ratio. 3:2:1

New Ratio. 1:1:1

Sacrificing/gaining ratio

Vinod. 3/6-1/3=1/6 (Sacrificing)

Sunita. 2/6-1/3=Nil

Simran. 1/6-1/3= -1/6(gaining)

P&L(credit). 60,000

Gen. Res. 30,000

90,000

Simran A/c. Dr. (1/6 of 90,000). 15,000

To Vinod A/c (1/6 of 90,000). 15,000