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Question
X and Y were partners in a firm sharing profits and losses in the ratio of 2 : 1. Z was admitted for 1/3rd share in the profits. On the date of Z's admission, the Balance Sheet of X and Y showed General Reserve of ₹ 2,50,000 and a credit balance of ₹ 50,000 in Profit and Loss Account. Pass necessary Journal entries on the treatment of these items on Z's admission.
Solution
|
Journal |
|||||
|
Date |
Particulars |
L.F. |
Debit Amount (Rs) |
Credit Amount (Rs) |
|
|
|
General Reserve A/c |
Dr. |
|
2,50,000 |
|
|
|
Profit and Loss A/c |
Dr. |
|
50,000 |
|
|
|
To X’s Capital A/c |
|
|
|
2,00,000 |
|
|
To Y’s Capital A/c |
|
|
|
1,00,000 |
|
|
(Adjustment of balance in General Reserve A/c and P&L A/c in old ratio) |
||||
Working Notes:
WN1 Calculation of Share of General Reserve & P&L A/c
X's Share = 3,00,000 x `2/3` = Rs. 2,00,000
Y's Share = 3,00,000 x `1/3` = Rs. 1,00,000.
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