Question

Ramesh wants to retire from the firm. The gain (profit) on revaluation on that date was ₹ 12,000. Mohan and Rahul want to share this in their new profit-sharing ratio of 3 : 2. Ramesh wants this to be shared equally. How is the profit to be shared? Give reasons.

Answer 1

Revaluation of assets and liabilities is made at the time of Ramesh’s retirement and not after his retirement. Therefore, profits on revaluation will be distributed among all the partners in their old profit sharing ratio. In the absence of partnership deed, profits are distributed equally among all the partners.

Therefore, Profit Share of each Partner = `12,000 xx 1/3 = "Rs" 4,000`

Journal
Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
Revaluation A/c	Dr.		12000
To Ramesh’s Capital A/c				4000
To Mohan’s Capital A/c				4000
To Rahul’s Capital A/c				4000
(Revaluation profit distributed among all the partners in their old ratio)