X, Y and Z are sharing profits and losses in the ratio of 5:3:2. They decide to share future profits and losses in the ratio of 2:3:5 with effect from 1st April, 2002. They also decide to record the effect of the reserves without affecting their book figures, by passing a single adjusti ng entry. General Reserve Rs. 50,000 Profit & loss A/C (Dr) Rs. 10,000 Advertisement Suspense A/C(Dr) Rs. 20,000 Pass the necessary single adjusting entry.
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student-nameAiswarya asked in Accountancy
X, Y and Z were sharing profits and losses in the ratio of 5:3:2. They decided to share future profits and losses in the ratio of 2:3:5 with effect from 1.4.2007. They decided to record the effect of the following, without affecting their book values:-
(i) Profit and Loss Account Rs. 24,000
(ii) Advertisement Suspense Account Rs. 12,000
Pass the necessary adjusting entry.
Urgent plz...:)
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student-nameNimisha John answered this
11 helpful votes in Accountancy, Class XII-Commerce
Old Ratio=5:3:2
New Ratio=2:3:5
Sacrificing Ratio
X=5/10-2/10=3/10(sacrificing)
Y=3/10-3/10=0
Z=2/10-5/10=-3/10(gaining)
Profit and Loss a/c 24000
Advertisement exp -12000
_______
12000
_______
The gaining partner(Z) will give his share of gain to the sacrificing partner(X) due to the change in the profit sharing ratio.
Z will give=3/10*12000
=3600
Adjustment Entry:
Z's Capital A/c Dr 3600
To X' Capital A/c 3600
Explanation:
hope it helps