Question

X and Y are partners in a firm sharing profits and losses in the ratio of 3 : 2. On 1st April, 2018, they admit Z as a new partner for 1/5th share in profits . On that date, there was a balance of ₹ 1,50,000 in General Reserve and a debit balance of ₹ 20,000 in the Profit and Loss Account of the firm. Pass necessary journal entries regarding adjustment of reserve and accumulated profit/loss.

Answer 1

Journal entries given below.

Explanation:

The old ratio given for the partners X and Y = 3:2

Calculation of the shares:

Calculating the share of General Reserve would be:  

X’s share

$=1,50,000 \times \frac{3}{5}=90,000$

Y’s share

$=1,50,000 \times \frac{2}{5}=60,000$

Calculation of the shares of Debit balance:

Now, share of debit balance will be calculated as follows:

Debit balance given as = Rs. 20,000

Debit by X’s account

$=20,000 \times \frac{3}{5}=12,000$

Debit by Y’s account

$=20,000 \times \frac{2}{5}=8,000$