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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Bootstrap and Davy Jones are partners sharing profits in the ratio of 2 : 1. On 31st March, 2025, their Balance Sheet showed a General Reserve of ₹60,000. It was decided that in future they will share profits and losses in the ratio of 3 : 2. Pass the necessary Journal entry in each of the following alternative cases: (i) when the General Reserve is not to be shown in the new Balance Sheet; (ii) when the General Reserve is to be shown in the new Balance Sheet.
Sacrifice / (Gain): Bootstrap = 2/3 – 3/5 = 1/15 (Sacrifice); Davy Jones = 1/3 – 2/5 = –1/15 (Gain).
Case (i) – General Reserve distributed:
JOURNAL
| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| 2025 Apr 1 | General Reserve A/c Dr. | 60,000 | ||
| To Bootstrap’s Capital A/c (60,000 × 2/3) | 40,000 | |||
| To Davy Jones’s Capital A/c (60,000 × 1/3) | 20,000 | |||
| (General Reserve distributed in the old ratio 2 : 1) |
Case (ii) – General Reserve retained: the gaining partner compensates the sacrificing partner – ₹60,000 × 1/15 = ₹4,000.
JOURNAL
| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| 2025 Apr 1 | Davy Jones’s Capital A/c Dr. | 4,000 | ||
| To Bootstrap’s Capital A/c | 4,000 | |||
| (Adjustment of General Reserve in the sacrificing / gaining ratio) |
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.21 - 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.
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