Question

Vinay, Usha, and Punit are partners in a firm. They have been sharing profits and losses in the ratio of 3 : 4 : 1.

Punit wants the profits to be shared equally amongst the partners. He further wants the change in the profit-sharing ratio to be applicable retrospectively for the last two years. Vinay and Usha have no objection to this.

The profits for the last two years were ₹ 70,000 and ₹ 50,000.

You are required to record the adjustment by means of a single journal entry.

Answer 1

Old Profit Sharing Ratio = 3 : 4 : 1

New Profit Sharing Ratio = 1 : 1 : 1

Vinay’s Sacrifice = `3/8 - 1/3`

= `(9 - 8)/24`

= `1/24`

Usha’s Sacrifice = `4/8 - 1/3`

= `(12 - 8)/24`

= `4/24`

= `1/6`

Punit’s gain = `1/3 - 1/8`

= `(8 - 3)/24`

= `5/24`

Vinay’s Sacrifice = `1,20,000 xx 1/24`

= 5,000

Usha’s Sacrifice = `1,20,000 xx 1/6`

= 20,000

Punit’s gain = `1,20,000 xx 5/24`

= 25,000

Journal Entry
Date	Particulars	L.F.	Amount (₹)	Amount (₹)
	Vinay’s Capital A/c   ...Dr.		5,000	-
	Usha’s Capital A/c   ...Dr.		20,000	-
	To Punit’s Capital A/c		-	25,000
	(Being the gain of Punit due to the profit-sharing ratio.)