Question

A, B and C are partners sharing profits in 2 : 2 : 1. On 1st April, 2024, they admitted Z for `1/4`th share. On the date of admission, the following items appeared in their Balance Sheet:

	₹
General Reserve	1,50,000
Workmen Compensation Reserve	40,000
Profit & Loss A/c (Cr.)	60,000
Advertisement Suspense A/c (Dr.)	25,000

Pass necessary journal entries.

Answer 1

Journal Entry
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
	General Reserve A/c   ...Dr.		1,50,000
	Workmen Compensation Reserve A/c   ...Dr.		40,000
	Profit & Loss A/c   ...Dr.		60,000
	To A’s Capital A/c			1,00,000
	To B’s Capital A/c			1,00,000
	To C’s Capital A/c			50,000
	(Accumulated profits and reserves distributed among old partners in old ratio 2 : 2 : 1)
	A’s Capital A/c   ...Dr.		10,000
	B’s Capital A/c   ...Dr.		10,000
	C’s Capital A/c   ...Dr.		5,000
	To Advertisement Suspense A/c			25,000
	(Advertisement Suspense written off among old partners in old ratio 2 : 2 : 1)

Working Note:

General Reserve = ₹ 1,50,000

Workmen Compensation Reserve = ₹ 40,000

Profit & Loss (Cr.) = ₹ 60,000

= 1,50,000 + 40,000 + 60,000

= 2,50,000

Distribute ₹ 2,50,000 among A, B, and C in 2 : 2 : 1.

A = `2,50,000 xx 2/5`

= 1,00,000

B = `2,50,000 xx 2/5`

= 1,00,000

C = `2,50,000 xx 1/5`

= 50,000