Question

X and Y are partners in a firm sharing profits and losses in the ratio of 3 : 2. On 1st April, 2019, they admit Z as a partner for 1/5th share in profits. On that date, there was a balance of ₹ 1,50,000 in General Reserve and a debit balance of ₹ 20,000 in the Profit and Loss Account of the firm. Pass necessary Journal entries regarding adjustment of reserve and accumulated profit/loss.

Answer 1

Journal
Date	Particulars		L.F.	Debit Amount (₹)	Credit Amount (₹)
2019 April 1	General Reserve A/c	Dr.		1,50,000
	To X’s Capital A/c				90,000
	To Y’s Capital A/c				60,000
	(Adjustment of balance in General Reserve A/c in old ratio)
	X’s Capital A/c	Dr.		12,000
	Y’s Capital A/c	Dr.		8,000
	To Profit and Loss A/c				20,000
	(Adjustment of debit balance in P&L A/c in old ratio)

Working Notes:
WN1 Calculation of Share of General Reserve
X's Share = 1,50,000 x `3/5` = 90,000

Y's Share = 1,50,000 x `2/5` = 60,000

WN2 Calculation of Share of Debit Balance in P&L A/c

X's Share = 20,000 x `3/5` = 12,000

Y's Share = 20,000 x `2/5` =  8,000