Question

X and Y are partners sharing profits in the ratio of 3 : 2. They admitted Z as a partner for 1/4th share of profits. At the time of admission of Z,  Investments appeared at ₹ 80,000. Half of the investments to be taken by X and Y in their profit-sharing ratio at book value. Remaining investments were valued at ₹ 50,000. Pass the necessary Journal entries.

Answer 1

Journal
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
	X’s Capital A/c	Dr.		24,000
	Y’s Capital A/c	Dr.		16,000
	To Investments A/c				40,000
	(Half of the investments taken over by X and Y)
	Investment A/c	Dr.		10,000
	To Revaluation A/c				10,000
	(Value of investments increased)
	Revaluation A/c	Dr.		10,000
	To X’s Capital A/c				6,000
	To Y’s Capital A/c				4,000
	(Profit on revaluation transferred to Partners’ Capital A/c)