Loading Tutorstips...
✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
A and B are partners in a firm sharing profits in the ratio of 2 : 1. They decided, with effect from 1st April, 2024, that they would share profits in the ratio of 3 : 2. But this decision was taken after the profit for the year ended 31st March, 2025 of ₹90,000 was distributed in the old ratio. The profits for the years ended 31st March, 2023 and 2024 were ₹60,000 and ₹75,000 respectively. It was decided that the Goodwill Account will not be opened and the necessary adjustment be made through Capital Accounts, which on 31st March, 2025 stood at ₹1,50,000 for A and ₹90,000 for B. Pass the necessary Journal entries and prepare the Capital Accounts.
Sacrifice / (Gain): A = 2/3 – 3/5 = 10/15 – 9/15 = 1/15 (Sacrifice); B = 1/3 – 2/5 = 5/15 – 6/15 = –1/15 (Gain).
JOURNAL
| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| 2024 Apr 1 | A’s Capital A/c Dr. (90,000 × 1/15) | 6,000 | ||
| To B’s Capital A/c | 6,000 | |||
| (Profit of 2024-25 wrongly distributed in the old ratio, now adjusted to the new ratio) | ||||
| 2024 Apr 1 | B’s Capital A/c Dr. (1,35,000 × 1/15) | 9,000 | ||
| To A’s Capital A/c | 9,000 | |||
| (Adjustment of goodwill on change in profit-sharing ratio) |
Partners’ Capital Accounts
| Particulars (Dr.) | A (₹) | B (₹) | Particulars (Cr.) | A (₹) | B (₹) |
|---|---|---|---|---|---|
| To B’s Capital A/c (profit adj.) | 6,000 | – | By Balance b/d | 1,50,000 | 90,000 |
| To A’s Capital A/c (goodwill adj.) | – | 9,000 | By A’s Capital A/c (profit adj.) | – | 6,000 |
| To Balance c/d | 1,53,000 | 87,000 | By B’s Capital A/c (goodwill adj.) | 9,000 | – |
| Total | 1,59,000 | 96,000 | Total | 1,59,000 | 96,000 |
Working Notes: Adjustment of profit – ₹90,000 wrongly shared 2 : 1 should be 3 : 2; net ₹6,000 (90,000 × 1/15) transferred from A to B. Goodwill = profits of 2023 + 2024 = ₹60,000 + ₹75,000 = ₹1,35,000; adjustment ₹9,000 (1,35,000 × 1/15) from B (gainer) to A (sacrificer).
Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
This guide covers "T.S. Grewal Class 12 Chapter 3 Q.10 - Change in Profit-Sharing Ratio Among the Existing Partners", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to Chapter 3 - Change in Profit-Sharing Ratio Among the Existing Partners.
It is primarily curated for Class 11 and Class 12 high school commerce, accounting, and economics students, as well as aspirants preparing for board exams or CA Foundation.
You can take our custom-built interactive practice quiz directly on this page to test your understanding of "T.S. Grewal Class 12 Chapter 3 Q.10 - Change in Profit-Sharing Ratio Among the Existing Partners" instantly.