Question

Nidhi, Pranav, and Ishu were partners in a firm sharing profits and losses in the ratio of 5 : 4 : 1. With effect from 1st April, 2024, they decided to share profits and losses in the ratio of 4 : 1 : 5. On that date, there was a debit balance of ₹ 4,00,000 in the Profit and Loss Account. The necessary journal entry to show the effect of the above will be:

पर्याय

• Date	Particulars	Debit Amount (₹)	Credit Amount (₹)
  	Ishu’s Capital A/c   ...Dr.	1,60,000	−
  	To Nidhi’s Capital A/с	−	40,000
  	To Pranav’s Capital A/c	−	1,20,000

• Date	Particulars	Debit Amount (₹)	Credit Amount (₹)
  	Profit & Loss Capital A/c   ...Dr.	4,00,000	−
  	To Nidhi’s Capital A/с	−	2,00,000
  	To Pranav’s Capital A/c	−	1,60,000
  	To Ishu’s Capital A/c	−	40,000

• Date	Particulars	Debit Amount (₹)	Credit Amount (₹)
  	Nidhi’s Capital A/с   ...Dr.	2,00,000	−
  	Pranav’s Capital A/c  ...Dr.	1,60,000	−
  	Ishu’s Capital A/c  ...Dr.	40,000	−
  	To Profit & Loss A/c	−	4,00,000

• Date	Particulars	Debit Amount (₹)	Credit Amount (₹)
  	Nidhi’s Capital A/с   ...Dr.	40,000	−
  	Pranav’s Capital A/c  ...Dr.	1,20,000	−
  	To Ishu’s Capital A/c	−	1,60,000

Answer 1

Date	Particulars	Debit Amount (₹)	Credit Amount (₹)
	Nidhi’s Capital A/с   ...Dr.	40,000	−
	Pranav’s Capital A/c  ...Dr.	1,20,000	−
	To Ishu’s Capital A/c	−	1,60,000

Explanation:

If the absence of information about the adjustment is given, the balance of the Profit and Loss Account is divided in the old ratio.

Old profit sharing ratio = 5 : 4 : 1

New profit sharing ratio = 4 : 1 : 5

Gaining ratio = New share − old share

Nidhi’s gain/sacrifice = `4/10 - 5/10`

= `(-1)/10` (sacrifice)

Pranav’s gain/sacrifice = `1/10 - 4/10`

= `(-3)/10` (sacrifice)

Ishu’s gain/sacrifice = `5/10 - 1/10`

= `4/10` (gain)

Gaining a partner, Ishu will compensate the sacrificing partners, Nidhi and Pranav.

Nidhi’s share = `4,00,000 xx 1/10`

= ₹ 40,000

Pranav’s share = `4,00,000 xx 3/10`

= ₹ 1,20,000

Ishu’s share = `4,00,000 xx 4/10`

= ₹ 1,60,000