Question

X, Y and Z share profits as 5 : 3 : 2 . They decide to share their future profits as 4 : 3 : 3 with effect from 1st April, 2018. On this date the following revaluations have taken place :
Pass necessary adjustment entry to be made because of the above changes in the values of assets and liabilities. However, old values will continue in the books.

Answer 1

Answer:

X, Y and Z share profits as 5 : 3 : 2 . They decide to share their future profits as 4 : 3 : 3 with effect from 1st April, 2018. On this date the following revaluations have taken place :

Pass necessary adjustment entry to be made because of the above changes in the values of assets and liabilities.

Explanation:

old values will continue in the books.

Answer 2

Profit on Revaluation is Rs.7,600cr

Explanation:

Calculation of sacrificing Ratio

Old Ratio (X and Y) =2:3

New Ratio (X and Y) = 1: 2

Sacrificing Ratio =Old ratio - New ratio

X's Share = $\frac{5}{10}$ - $\frac{4}{10}$ = $\frac{1}{10}$

Y's Share =  $\frac{3}{10}$ - $\frac{3}{10}$ = Nil

Z's Share =$\frac{2}{10}$- $\frac{3}{10}$=- $\frac{1}{10}$

3) Adjustment of Revaluation Profit

Credits to X's Capital = 7,600 × $\frac{1}{10}$ = 760

Dedits to Z's Capital  = 7,600 × $\frac{1}{10}$ = 760