Question

A, B, C and D are partners sharing profits in the ratio of 4 : 3 : 2 : 2. C retires and the remaining partners decided to share future profits in 5 : 3 : 2. On the date of C’s retirement there was a debit balance of ₹ 30,800 in the profit and loss account. Show the necessary journal entry for the treatment of profit and loss account balance.

Answer 1

Journal Entry
Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
	A’s Capital A/c          ...Dr.		11,200
	B’s Capital A/c          ...Dr.		8,400
	C’s Capital A/c          ...Dr.		5,600
	D’s Capital A/c          ...Dr.		5,600
	To Profit and Loss A/c			30,800
	(Being the debit balance in Profit and Loss Account distributed to capital A/cs old ratio i.e., 4 : 3 : 2 : 2 on D’s retirement)