Question

Raka, Seema, and Mahesh were partners sharing profits and losses in the ratio of 5: 3: 2. With effect from 1^st April, 2019, they mutually agreed to share profits and losses in the ratio of 2: 2: 1.
On that date, there was a workmen's compensation fund of ₹ 90,000 in the books of the firm. It was agreed that:
(i) Goodwill of the firm be valued at ₹ 70,000.
(ii) Claim for workmen's compensation amounted to ₹ 40,000.
(iii) Profit on revaluation of assets and re-assessment of liabilities amounted to ₹ 40,000.
Pass necessary journal entries for the above transactions in the books of the firm.

Answer 1

In the books of Raka, Seema and Mahesh 
Journal 

Date	Particulars		L.F.	Debit Amount (₹)	Credit Amount(₹)
2019
Apr. 01	Seema’s Capital A/c (70,000 × 1/10)	Dr.		7,000
	To Raka’s Capital A/c (70,000 × 1/10)				7,000
	(Being goodwill adjusted among partners)
Apr. 01	Workmen Compensation Fund A/c	Dr.		90,000
	To Claim on the Fund A/c				40,000
	To Raka’s Capital A/c				25,000
	To Seema’s Capital A/c				15,000
	To Mahesh’s Capitals A/c				10,000
	(Being claim on workmen compensation provided and excess distributed)
Apr. 01	Revaluation A/c	Dr.		40,000
	To Raka’s Capital A/c				20,000
	To Seema’s Capital A/c				12,000
	To Mahesh’s Capitals A/c				8,000
	(Being revaluation profit distributed)

 

Working Notes: 
1. Calculation of Gain/Sacrifice

Particulars	Raka	Seema	Mahesh
Old Ratio	5/10	3/10	2/10
New Ratio	2/5	2/5	1/5
Gain/Sacrifice	(5/10 – 2/5) = 1/10	(3/10 – 2/5)= −1/10 (Gain)	(2/10 – 1/5) = Nil