Question

X and Y are partners in a firm sharing profits in the ratio of 3 : 2. They admitted Z as a new partner and fixed the new profit-sharing ratio as 3 : 2 : 1. At the time of admission of Z, Debtors and Provision for Doubtful Debts appeared at ₹ 50,000 and ₹ 5,000 respectively all debtors are good. Pass the necessary journal entries.

Answer 1

Solution:

                                                   Journal  

Sr. No.              Particulars                              Debit Rs.           Credit Rs.

a)         Provision for doubtful debts A/c   Dr.   5,000

                 To Revaluation A/c                                                  5,000

       (Being provision on debtors reduced)

(b)          Revaluation A/c                          Dr.     5,000

                    To X's Capital A/c                                                   3,000

                     To Y's Capital A/c                                                  2,000

(Being profit on revaluation transferred to partners' capital A/c)