Question

XY&Z are partners 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 2020. following is the extract
of their balance sheet as on 31st March 2020:
Liability Amount Asset Amount
G.Reserve 75,000 Adv. Sus A/c 50,000
P & L A/c 37,500
W C Reserve 12,500
Pass Necessary Journal Entries.

Answer 1

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Z's Capital a/c..............Dr. 70200

To X's Capital a/c 70200

(Being adjustment entry passed)

Working notes:

1. Amount to be distributed = general reserve + P and L a/c - advertisement suspense

= 6000 +240000 -12000 = 234000

2. Calculation of sacrifice and gain

X: 2/10-5/10 = (3/10) sacrifice

Z: 5/10 - 2/10 = 3/10 gain

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