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X And Y Are Partners in a Firm Sharing Profits and Losses in the Ratio of 3 : 2. with Effect from 1st April, 2019 - CBSE (Arts) Class 12 - Accountancy

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Question

X and Y are partners in a firm sharing profits and losses in the ratio of 3 : 2. With effect from 1st April, 2019, they decided to share future profits equally. On the date of change in the profit-sharing ratio, the Profit and Loss Account showed a credit balance of ₹ 1,50,000. Record the necessary Journal entry for the distribution of the balance in the Profit and Loss Account immediately before the change in the profit-sharing ratio. 

Solution

Journal

Date
 

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

2019
April 1


Profit & Loss 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 P&L A/c in old ratio)

 

 

 

Working Notes:

WN1 Calculation of Share of Profit and Loss A/c

X's share = `1,50,000 xx 3/5 = 90,000`

Y's share = `1,50,000 xx 2/5 = 60,000`

  Is there an error in this question or solution?

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Solution X And Y Are Partners in a Firm Sharing Profits and Losses in the Ratio of 3 : 2. with Effect from 1st April, 2019 Concept: Retirement and Death of a Partner - Calculation of New Profit Sharing Ratio.
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