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Question
Ravi, Vijay and Sujay were partners sharing profits in the ratio of `1/2 : 1/3 : 1/6`.
Vijay decided to retire, his share being taken up by the remaining partners in the ratio 1 : 4.
On Vijay’s retirement, a loss of ₹ 12,000 was determined upon revaluation of assets and liabilities.
You are required to:
- Calculate the new profit-sharing ratio of the remaining partners.
- Pass the journal entry to write off the loss on revaluation of assets and liabilities.
Solution
(a) (i) Calculation of New profit sharing ratio:
Old Ratio -
| Ravi | Vijay | Sujay |
| `1/2` | `1/3` | `1/6` |
∴ Old Ratio = 3 : 2 : 1
Vijay gives his share to the remaining partner in the ratio of 1 : 4
Ravi gets from Vijay `= 2/6 xx 1/5 = 2/30`
Ravi's new share = `3/6 + 2/30 = 17/30`
Sujay gets from Vijay = `2/6 xx 4/5 = 8/30`
Sujay's new share = `1/6 + 8/30 = 13/30`
New Profit Sharing Ratio = Ravi : Sujay
`= 17/30 : 13/30` = 17 : 13
(b)
| Journal Entries | |||
| Date | Particulars | Amount (₹) | Amount (₹) |
| Ravi's Capital A/c Dr. Vijay's Capital A/c Dr. Sujay's Capital A/c Dr. To Realisation A/c (Being Revaluation Account loss transferred to partner's capital A/c in their old ratio) |
6,000 4,000 2,000 |
12,000 |
|
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RELATED QUESTIONS
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|
Liabilities |
Amount (₹) |
Assets |
Amount (₹) |
||
| Creditors |
42,000 |
Land and Building | 1,24,000 | ||
| Investment Fluctuation Fund | 20,000 | Motor Vans | 40,000 | ||
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|
30,000 |
|
| K | 40,000 |
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|
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|||
|
|
|
Cash |
32,000 |
||
|
3,62,000 |
3,62,000 |
||||
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| Liabilities | Amount (₹) |
Assets | Amount (₹) |
|
| Capital A/cs: | Fixed Assets | 6,00,000 | ||
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