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Question
L, M and N are partners sharing profits in the ratio of 5: 3 : 2. They decided to share profits equally with effect from 1st April, 2022. On that date, there was a balance of ₹ 2,00,000 in General Reserve and a credit balance of ₹ 4,00,000 in the Profit and Loss Account. The Journal Entry for the above on account of change in profit sharing ratio will be:
Options
JOURNAL S.No. Particulars L.F. Debit Amount (₹) Credit Amount (₹) General Reserve A/c ...Dr. 2,00,000 - To Profit and Loss A/c - 2,00,000 JOURNAL S.No. Particulars L.F. Debit Amount (₹) Credit Amount (₹) M's Capital A/c ...Dr. 80,000 - N's Capital A/c ...Dr. 20,000 - To L's Capital A/c - l,00,000 JOURNAL S.No. Particulars L.F. Debit Amount (₹) Credit Amount (₹) General Reserve A/c ...Dr. 2,00,000 - Profit and Loss A/c ...Dr. 4,00,000 - To L's Capital A/c - 3,00,000 To M's Capital A/c - 1,80,000 To N's Capital A/c - 1,20,000 JOURNAL S.No. Particulars L.F. Debit Amount (₹) Credit Amount (₹) General Reserve A/c ...Dr. 2,00,000 - Profit and Loss A/c ...Dr. 4,00,000 - To L's Capital A/c 3,00,000 To M's Capital A/c 1,80,000 To N's Capital A/c 1,20,000
Solution
| JOURNAL | ||||
| S.No. | Particulars | L.F. | Debit Amount (₹) | Credit Amount (₹) |
| General Reserve A/c ...Dr. | 2,00,000 | |||
| Profit and Loss A/c ...Dr. | 4,00,000 | |||
| To L's Capital A/c | 3,00,000 | |||
| To M's Capital A/c | 1,80,000 | |||
| To N's Capital A/c | 1,20,000 | |||
Explanation:
When the profit sharing ratio is changed, reserves, accumulated profits and losses existing in the firm's books are transferred to the partners' capital accounts or the current accounts in their old profit sharing ratio.
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On the retirement of Hari from the firm of 'Hari, Ram and Sharma' the balance-sheet showed a debit balance of Rs 12,000 in the profit and loss account. For calculating the amount payable to Hari this the balance will be transferred
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2008 |
2009 |
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Sales (Rs) |
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Gross Profit |
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