Question
X, Y and Z are sharing profits and losses in the ratio of 5 : 3 : 2. They decide to share future profits and losses in the ratio of 2 : 3 : 5 with effect from 1st April, 2019. They also decide to record the effect of the following accumulated profits, losses and reserves without affecting their book values by passing a single entry .
Book Values (₹)  
General Reserve  6,000 
Profit and Loss A/c (Credit)  24,000 
Advertisement Suspense A/c  12,000 
Pass an Adjustment Entry.
Solution
Journal

Particulars 
L.F. 
Debit Amount (₹) 
Credit Amount (₹) 

2019 






To X’s Capital A/c 



5,400 

(Adjustment for General Reserve, Profit and Loss A/c and Advertisement Suspense account is made on change in profit sharing ratio) 



Working Notes:
WN 1
Net amount to be adjusted = General reserve + profit and loss A/c (Credit)  Advertisement suspense A/c
= 6,000 + 24,000  12,000
= Rs 18,000
WN 2 Calculation of Sacrificing (or Gaining) Ratio
Old Ratio (X, Y and Z) = 5 : 3 : 2
New Ratio (X, Y and Z) = 2 : 3 : 5
Sacrificing (or Gaining) Ratio = Old Ratio − New Ratio
X's share = `5/10  2/10 = 3/10` (sacrifice)
Y's share = `3/10  3/10 = "Nil"`
Z's share = `2/10  5/10 = (3)/10` (gain)
Amount to be debited to X's capital = `18,000 xx 3/10` = Rs 5,400
Amount to be debited to Z's capital = `18,000 xx 3/10` = Rs 5,400