Question

Due to change in the profit sharing ratio, Anisha's gain is 1/5^th while Harit's sacrifice is 1/5^th. They decided to adjust the following without affecting their book values, by passing a single adjustment entry:

General Reserve	₹ 20,000
Profit & Loss Account (Dr.)	₹ 30,000

The necessary adjustment entry will be:

Options

• Debit Anisha's capital account by ₹ 2,000 and credit Harit's capital account by ₹ 2,000

• Debit Anisha's capital account by ₹ 10,000 and credit Harit's capital account by ₹ 10,000.

• Debit Harit's capital account by ₹ 2,000 and credit Anisha's capital account by ₹ 2,000.

• Debit Harit's capital account by ₹ 10,000 and credit Anisha's capital account by ₹ 10,000.

Answer 1

Debit Harit's capital account by ₹ 2,000 and credit Anisha's capital account by ₹ 2,000.

Explanation:

`1/5xx20,000` = 4,000 (General Reserve)

Profit & Loss Adjustment = `1/5xx3000` = 6,000

Total = 10,000