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# A, B And C Are Sharing Profits and Losses in the Ratio of 2 : 2 : 1. - CBSE (Arts) Class 12 - Accountancy

ConceptRetirement and Death of a Partner - Calculation of New Profit Sharing Ratio

#### Question

A, B and C are sharing profits and losses in the ratio of 2 : 2 : 1. They decided to share profit w.e.f. 1st April, 2019 in the ratio of 5 : 3 : 2. They also decided not to change the values of assets and liabilities in the books of account. The book values and revised values of assets and liabilities as on the date of change were as follows:​

 Book values (₹) Revised values (₹) Machinery 2,50,000 3,00,000 Computers 2,00,000 1,75,000 Sundry Creditors 90,000 75,000 Outstanding Expenses 15,000 25,000

#### Solution

Journal

 Date Particulars L.F. Debit Amount (₹) Credit Amount (₹) 2019 April 1 A’s Capital A/c (30,000×110=3,000)(30,000×110=3,000) Dr. 3,000 To B’s Capital A/c 3,000 (Adjustment entry made for change in ratio)

Working Notes:

WN1: Calculation of Sacrifice or Gain

A : B : C = 2 : 2 : 1(old ratio)

A : B : C = 5 : 3 : 2 (new ratio)

Sacrificing (or gaining ratio) = Old ratio - New ratio

A's share = 2/5 - 5/10 = (4-45)/10 = 1/10 (gain)

B's share = 2/5 - 3/10 = (4-3)/10 = 1/10 (sacrifice)

C's share = 1/5 - 2/10 = (2-2)/10 = 0

WN2: Calculation of Profit or Loss on Revaluation

Revaluation A/c

 Dr. Cr. Particulars Amount (₹) Particulars Amount (₹) Computers A/c 25,000 Machinery A/c 50,000 Outstanding expenses A/c 10,000 Creditors A/c 15,000 Profit on Revaluation 30,000 65,000 65,000
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Solution A, B And C Are Sharing Profits and Losses in the Ratio of 2 : 2 : 1. Concept: Retirement and Death of a Partner - Calculation of New Profit Sharing Ratio.
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