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A, B And C Who Are Presently Sharing Profits and Losses in the Ratio of 5 : 3 : 2 Decide to Share Future Profits and Losses in the Ratio of 2 : 3 : 5 - CBSE (Arts) Class 12 - Accountancy

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Question

A, B and C who are presently sharing profits and losses in the ratio of 5 : 3 : 2 decide to share future profits and losses in the ratio of 2 : 3 : 5. Give the Journal entry to distribute 'Workmen Compensation Reserve' of ₹ 1,20,000 at the time of change in profit-sharing ratio, when:
(i) no information is given; (ii) there is no claim against it.

Solution

(i) & (ii)

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

 

Workmen Compensation Reserve A/c

Dr.

 

1,20,000

 

 

      To A’s Capital A/c

 

 

 

60,000

 

      To B’s Capital A/c

 

 

 

36,000

 

      To C’s Capital A/c

 

 

 

24,000

 

(Workmen Compensation Reserve distributed)

 

 

 

 

Note:

In the both the cases, Workmen Compensation Reserve should be distributed in old ratio i.e., 5:3:2.

  Is there an error in this question or solution?

APPEARS IN

Solution A, B And C Who Are Presently Sharing Profits and Losses in the Ratio of 5 : 3 : 2 Decide to Share Future Profits and Losses in the Ratio of 2 : 3 : 5 Concept: Retirement and Death of a Partner - Calculation of New Profit Sharing Ratio.
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