Question

X, Y and Z who are sharing profits in the ratio of 5 : 3 : 2, decide to share profits in the ratio of 2 : 3 : 5 with effect from 1st April, 2019. Workmen Compensation Reserve appears at ₹ 1,20,000 in the Balance Sheet as at 31st March, 2019 and Workmen Compensation Claim is estimated at ₹ 1,50,000. Pass Journal entries for the accounting treatment of Workmen Compensation Reserve. 

Answer 1

Journal

Date	Particulars		L.F.	Debit Amount (₹)	Credit Amount (₹)
2019 April 1
	Workmen Compensation Reserve A/c	Dr.		1,20,000
	Revaluation A/c	Dr.		30,000
	To Provision for Workmen Compensation Claim A/c				1,50,000
	(Provision created and shortfall charged to Revaluation A/c)
	X’s Capital A/c	Dr.		15,000
	Y’s Capital A/c	Dr.		9,000
	Z’s Capital A/c	Dr.		6,000
	To Revaluation A/c				30,000
	(Loss on revaluation transferred to Partners’ Capital A/c)