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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

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

#### 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)
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#### APPEARS IN

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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