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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: - Accountancy

Journal Entry

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.

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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)

 

 

 

 

Concept: Retirement and Death of a Partner - Calculation of New Profit Sharing Ratio
  Is there an error in this question or solution?
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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 22 | Page 41
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