Question

P and share profits in 3 : 2. On 1st April, 2022, they admit R and S with `1/4 and 1/5` share respectively. The profit of the firm for the year ended 31st March 2023 amounted to 2,00,000. Prepare necessary journal entries for the distribution of profit.

Hint: New Ratios 33: 22: 25: 20.

Answer 1

1. Calculation of Profit Shares

P's Share: `2,00,000 xx 33/100 = 66,000`

Q's Share: `2,00,000 xx 22/100 = 44,000`

R's Share: `2,00,000 xx 25/100 = 50,000`

S's Share: `2,00,000 xx 20/100 = 40,000`

2. Journal Entries

Journal Entries for the year ended on 31st March, 2023
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
2023
Mar 31	Profit & Loss A/c   ...Dr.		2,00,000
	To Profit & Loss Appropriation A/c			2,00,000
	(Being net profit transferred to P&L Appropriation Account)
Mar 31	Profit & Loss Appropriation A/c   ...Dr.		2,00,000
	To P's Capital A/c			66,000
	To Q's Capital A/c			44,000
	To R's Capital A/c			50,000
	To S's Capital A/c			40,000
	(Being divisible profits distributed among partners in their new ratio))