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# Ashish, Aakash and Amit Are Partners Sharing Profits and Losses Equally. the Balance Sheet as at 31st March, 2019 Was as Follows: - CBSE (Arts) Class 12 - Accountancy

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

#### Question

Ashish, Aakash and Amit are partners sharing profits and losses equally. The Balance Sheet as at 31st March, 2019 was as follows:

 Liabilities Amount(₹) Assets Amount(₹) Sundry Creditors 75,000 Cash in Hand 24,000 General Reserve 90,000 Cash at Bank 1,40,000 Capital A/cs: Sundry Debtors 80,000 Ashish 3,00,000 Stock 1,40,000 Aakash 3,00,000 Land and Building 4,00,000 Amit 2,75,000 8,75,000 Machinery 2,50,000 Advertisement Suspense 6,000 10,40,000 10,40,000

​The partners decided to share profits in the ratio of 2 : 2 : 1 w.e.f. 1st April, 2019. They also decided that:
(i) Value of stock to be reduced to ₹ 1,25,000.
(ii) Value of machinery to be decreased by 10%.
(iii) Land and Building to be appreciated by ₹ 62,000.
(iv) Provision for Doubtful Debts to be made @ 5% on Sundry Debtors.
(v) Aakash was to carry out reconstitution of the firm at a remuneration of ₹ 10,000.
Pass necessary Journal entries to give effect to the above.

#### Solution

Journal

 Date Particulars L.F. Debit Amount (₹) Credit Amount (₹) April 1 General Reserve A/c Dr. 90,000 To Ashish’s Capital A/c 30,000 To Akash’s Capital A/c 30,000 To Amit’s Capital A/c 30,000 (Reserve distributed) April 1 Ashish’s Capital A/c Dr. 2,000 Akash’s Capital A/c Dr. 2,000 Amit’s Capital A/c Dr. 2,000 To Advertisement Suspense A/c 6,000 (Advertisement Suspense distributed) April 1 Revaluation A/c Dr. 54,000 To Stock A/c 15,000 To Machinery A/c 25,000 To Provision for Doubtful Debts A/c 4,000 To Akash’s Capital A/c (Remuneration) 10,000 (Assets revalued) April 1 Land & Building A/c Dr. 62,000 To Revaluation A/c 62,000 (Assets revalued) April 1 Revaluation A/c Dr. 8,000 To Ashish’s Capital A/c 2,666 To Akash’s Capital A/c 2,666 To Amit’s Capital A/c 2,667 (Profit made)
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Solution Ashish, Aakash and Amit Are Partners Sharing Profits and Losses Equally. the Balance Sheet as at 31st March, 2019 Was as Follows: Concept: Retirement and Death of a Partner - Calculation of New Profit Sharing Ratio.
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