Question

Mehak, Ayush and Anshu were partners in a firm sharing profits and losses in the ratio of 5 : 3 : 2. With effect from 1^st April, 2023, they agreed to share profits and losses in the ratio of 4 : 3 : 3. On that date, there was General Reserve of ₹ 80,000 in the books of the firm. It was agreed that:

1. Goodwill of the firm be valued at ₹ 3,00,000.
2. Loss on revaluation of assets and re-assessment of liabilities amounted to ₹ 50,000.

Pass necessary journal entries for the above transactions in the books of the firm.  

Answer 1

In the books of Mehak, Ayush and Anshu Journal Entries
Date	Particulars	L.F.	Amount Debit	Amount Credit
1.	General Reserve A/c   ...Dr.		80,000	-
	To Mehak's Capital A/c		-	40,000
	To Ayush's Capital A/c		-	24,000
	To Anshu's Capital A/c		-	16,000
	(Being General Reserve distributed to old partners in old ratio)
2.	Anshu's Capital A/c   ...Dr.		30,000	-
	To Mehak's Capital A/c		-	30,000
	(Being share of Goodwill adjusted among existing partners)
3.	Anshu's Capital A/c   ...Dr.		25,000	-
	Ayush's Capital A/c   ...Dr.		15,000	-
	Anshu's Capital A/c   ...Dr.		10,000	-
	To Revaluation A/c		-	50,000
	(Loss on revaluation written off from Partners' Capital A/c in old profit sharing ratio)

Working Note:

Calculation of Sacrificing/Gaining Ratio

Sacrificing/Gaining share = Old share − New share

Mehak = `5/10 - 4/10 = 1/10` (Sacrifice)

Ayush = `3/10 - 3/10 = 0`

Anshu = `2/10 - 3/10 = (-1)/10` (Gain)