Question

L, M and N are partners sharing profits in the ratio of 5: 3 : 2. They decided to share profits equally with effect from 1^st April, 2022. On that date, there was a balance of ₹ 2,00,000 in General Reserve and a credit balance of ₹ 4,00,000 in the Profit and Loss Account. The Journal Entry for the above on account of change in profit sharing ratio will be:

विकल्प

• JOURNAL
  S.No.	Particulars	L.F.	Debit Amount (₹)	Credit Amount (₹)
  	General Reserve A/c      ...Dr.		2,00,000	-
  	To Profit and Loss A/c		-	2,00,000

• JOURNAL
  S.No.	Particulars	L.F.	Debit Amount (₹)	Credit Amount (₹)
  	M's Capital A/c      ...Dr.		80,000	-
  	N's Capital A/c        ...Dr.		20,000	-
  	To L's Capital A/c		-	l,00,000

• JOURNAL
  S.No.	Particulars	L.F.	Debit Amount (₹)	Credit Amount (₹)
  	General Reserve A/c      ...Dr.		2,00,000	-
  	Profit and Loss A/c     ...Dr.		4,00,000	-
  	To L's Capital A/c		-	3,00,000
  	To M's Capital A/c		-	1,80,000
  	To N's Capital A/c		-	1,20,000

• JOURNAL
  S.No.	Particulars	L.F.	Debit Amount (₹)	Credit Amount (₹)
  	General Reserve A/c      ...Dr.		2,00,000	-
  	Profit and Loss A/c     ...Dr.		4,00,000	-
  	To L's Capital A/c			3,00,000
  	To M's Capital A/c			1,80,000
  	To N's Capital A/c			1,20,000

Answer 1

JOURNAL
S.No.	Particulars	L.F.	Debit Amount (₹)	Credit Amount (₹)
	General Reserve A/c      ...Dr.		2,00,000
	Profit and Loss A/c     ...Dr.		4,00,000
	To L's Capital A/c			3,00,000
	To M's Capital A/c			1,80,000
	To N's Capital A/c			1,20,000

Explanation:

When the profit sharing ratio is changed, reserves, accumulated profits and losses existing in the firm's books are transferred to the partners' capital accounts or the current accounts in their old profit sharing ratio.