# 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. - Accountancy

Numerical

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 'Investments Fluctuation Reserve' of ₹ 20,000 at the time of change in profit-sharing ratio, when investment (market value ₹ 95,000) appears in the books at ₹ 1,00,000.

#### Solution

Journal

 Date Particulars L.F. Debit Amount (Rs) Credit Amount (Rs) Investment Fluctuation Reserve A/c Dr. 5,000 To Investments A/c 5,000 (Adjustment for decrease in the value of investments) Investment Fluctuation Reserve A/c Dr. 15,000 To A’s Capital A/c 7,500 To B’s Capital A/c 4,500 To C’s Capital A/c 3,000 (Adjustment of balance in Investment Fluctuation Reserve A/c in old ratio)

Working Notes:
WN1 Calculation of Share of Investment Fluctuation Reserve

A's share = 15,000 xx 5/10 = 7,500

B's share = 15,000 xx 3/10 = 4,500

C's share = 15,000 xx 2/10 = 3,000

Concept: Retirement and Death of a Partner - Calculation of New Profit Sharing Ratio
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#### APPEARS IN

TS Grewal Class 12 Accountancy - Double Entry Book Keeping Volume 1
Chapter 4 Change in Profit-Sharing Ratio Among the Existing Partners
Exercise | Q 17 | Page 39