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Nitin, Tarun and Amar Are Partners Sharing Profits Equally and Decide to Share Profits in the Ratio of 2 : 2 : 1 W.E.F. 1st April, 2019. - CBSE (Arts) Class 12 - Accountancy

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Question

Nitin, Tarun and Amar are partners sharing profits equally and decide to share profits in the ratio of 2 : 2 : 1 w.e.f. 1st April, 2019. The extract of their Balance Sheet as at 31st March, 2019 is as follows:

Liabilities ₹   Assets ₹ 
Investments Fluctuation Reserve 60,000 Investments (At Cost) 4,00,000

Pass the Journal entries in each of the following situations:
(i) When its Market Value is not given;
(ii) When its Market Value is ₹ 4,00,000;
(iii) When its Market Value is ₹ 4,24,000;
(iv) When its Market Value is ₹ 3,70,000;
(v) When its Market Value is ₹ 3,10,000.

Solution

Journal

Date
 

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

2019

 

 

 

 

 

April 1

Investment Fluctuation Reserve A/c

Dr.

 

60,000

 

 

   To Nitin’s Capital A/c

 

 

 

20,000

 

   To Tarun’s Capital A/c

 

 

 

20,000

 

   To Amar’s Capital A/c

 

 

 

20,000

 

(Investment Fluctuation Reserve distributed)

 

 

 

 

 

Investment Fluctuation Reserve A/c

Dr.

 

60,000

 

 

   To Nitin’s Capital A/c

 

 

 

20,000

 

   To Tarun’s Capital A/c

 

 

 

20,000

 

   To Amar’s Capital A/c

 

 

 

20,000

 

(Investment Fluctuation Reserve distributed)

 

 

 

 

 

Investment Fluctuation Reserve A/c

Dr.

 

60,000

 

 

   To Nitin’s Capital A/c

 

 

 

20,000

 

   To Tarun’s Capital A/c

 

 

 

20,000

 

   To Amar’s Capital A/c

 

 

 

20,000

 

(Investment Fluctuation Reserve distributed)

 

 

 

 

 

Investments A/c

Dr.

 

24,000

 

 

    To Revaluation A/c

 

 

 

24,000

 

(Investments revalued)

 

 

 

 

 

Revaluation A/c

Dr.

 

24,000

 

 

   To Nitin’s Capital A/c

 

 

 

8,000

 

   To Tarun’s Capital A/c

 

 

 

8,000

 

   To Amar’s Capital A/c

 

 

 

8,000

 

(Revaluation profit transferred to Partners’ Capital A/c)

 

 

 

 

 

Investment Fluctuation Reserve A/c

Dr.

 

60,000

 

 

   To Investment A/c

 

 

 

30,000

 

   To Nitin’s Capital A/c

 

 

 

10,000

 

   To Tarun’s Capital A/c

 

 

 

10,000

 

   To Amar’s Capital A/c

 

 

 

10,000

 

(Investment Fluctuation Reserve distributed)

 

 

 

 

 

Investment Fluctuation Reserve A/c

Dr.

 

60,000

 

 

Revaluation A/c

Dr.

 

30,000

 

 

     To Investment A/c

 

 

 

90,000

 

(Decrease in investments set off against IFR and balance debited to Revaluation A/c)

 

 

 

 

 

Nitin’s Capital A/c

Dr.

 

10,000

 

 

Tarun’s Capital A/c

Dr.

 

10,000

 

 

Amar’s Capital A/c

Dr.

 

10,000

 

 

      To Revaluation A/c

 

 

 

30,000

 

(Loss on revaluation transferred to Partners’ Capital A/c)

     
  Is there an error in this question or solution?

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Solution Nitin, Tarun and Amar Are Partners Sharing Profits Equally and Decide to Share Profits in the Ratio of 2 : 2 : 1 W.E.F. 1st April, 2019. Concept: Retirement and Death of a Partner - Calculation of New Profit Sharing Ratio.
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