Question

A, B and C were partners sharing profits in the ratio of 1 : 3 : 2. Their fixed capitals were: A ₹ 3,00,000; B ₹ 400,000 and C ₹ 6,00,000. A retires and the new profit sharing ratio between B and C is agreed at 1 : 2. On this date, their Balance Sheet disclosed the following items:

BALANCE SHEET (an extract)
Liabilities	₹	Assets	₹
General Reserve	1,40,000	Advertisement Suspense Account	20,000
Profit and Loss Balance	30,000

Partners decided to record the effect of the above items without affecting their book values. Pass the necessary adjusting entry.

Answer 1

Journal
Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
	C’s Current A/c        ...Dr.		50,000
	To A’s Current A/c			25,000
	To B’s Current A/c			25,000