Question 07 Chapter 4 of +2 Part-1 - USHA Publication 12 Class Part - 1

Question 07 Chapter 4 of +2-Part-1

7. (Profit and loss account not closed) X and Y are partners in 4:1 ratio. They had Rs.40,000 in profit and loss a/c. Their future ratio will be 2:3. They decided not to close the profit and loss account. You are required to pass necessary adjustment entry.

The solution of Question 07 Chapter 4 of +2 Part-1: - 

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Journal

Date	Particulars		L.F.	Debit	Credit
	Y's Capital A/c	Dr.		16,000
	To X's Capital A/c				16,000
	(Being profit and loss adjusted through capital A/c)

Working Notes: -

Old Ratio of X and Y	=	4: 1
New Ratio of X and Y,	=	2 : 3

Calculate the Sacrificing or Gaining Ratio of Partners
Sacrificing or Gaining Ratio = Old Ratio - New Ratio

X’s Sacrificing/Gaining Share	=	4	-	2
		5		5

=	4 - 2
		5

=	2	(Sacrifice)
			5

Y’s Sacrificing/Gaining Share	=	1	-	3
		5		5

=	1 - 3
		5

=	-2	(Gain)
			5

Adjustment of Profit and loss:

Amount of profit & loss Credited to X's Capital	=	40,000	X	2
				5
	=	16,000

 

Amount of profit & loss debited to Y's Capital	=	40,000	X	2
				5
	=	16,000

 

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