Question 13 Chapter 4 of +2-A
Table of Contents
13. X, Y and Z are sharing profits and losses in the ratio of 5 : 3 : 2. They decide to share future profits and losses in the ratio of 2 : 3 : 5 with effect from 1st April, 2019. They also decide to record the effect of the following accumulated profits, losses and reserves without affecting their book values by passing a single entry .
| Book Values | |
| General Reserve | 6,000 |
| Profit and Loss A/c (Credit) | 24,000 |
| Advertisement Suspense A/c | 12,000 |
The solution of Question 13 Chapter 4 of +2-A
| In the Books of _______________ | |||||
| Date | Particulars |
L.F. | Debit | Credit | |
| Z’s Capital A/c | Dr | 5,400 | |||
| X’s Capital A/c | 5,400 | ||||
| (Being Adjustment for General Reserve, Profit and Loss A/c and Advertisement Suspense account is made on change in profit sharing ratio.) | |||||
Working Note :
| Net Amount to be Adjustment | = | General Reserve | + | Profit and Loss A/c (Credit) | + |
Advertisement Suspense A/c |
| = | 6,000 | + | 24,000 | – |
12,000 |
|
| = | 18,000 |
|
Solution: –
| Old Ratio of X, Y, & Z | = | 5 : 3 : 2 |
| New Ratio of X, Y, & Z | = | 2 : 3 : 5 |
Calculate the Sacrificing or Gaining Ratio of Partners
Sacrificing or Gaining Ratio = Old Ratio – New Ratio
| Mandeep’s Sacrificing/Gaining Share | = | 5 | – | 2 |
| 10 | 10 |
| 5- 2 | ||
| = | 10 |
| = | 3 | Sacrificing |
|
| 10 |
| Y’s Share Sacrificing/Gaining | = | 3 | – | 3 |
| 10 | 10 |
| 3- 3 | ||
| = | 10 | |
| = | Nil |
| Y’s Share Sacrificing/Gaining | = | 2 | – | 5 |
| 10 | 10 |
| 2- 5 | ||
| = | 10 |
| = | (-)3 | Gain |
|
| 10 |
| Amount to be Credited to X’s Capital | = | 18,000 | X | 3 |
| 10 | ||||
| = | 5,400 |
| Amount of Goodwill Credited to X’s Capital | = | 18,000 | X | 3 |
| 10 | ||||
| = | 5,400 |
T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)
- Chapter No. 1 – Financial Statement of Not-For-Profit Organisations
- Chapter No. 2 – Accounting for Partnership Firms – Fundamentals
- Chapter No. 3 – Goodwill: Nature and Valuation
- Chapter No. 4 – Change in Profit-Sharing Ratio Among the Existing Partners
- Chapter No. 5 – Admission of a Partner
- Chapter No. 6 – Retirement/Death of a Partner
- Chapter No. 7 – Dissolution of a Partnership Firm
T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)
- Chapter No. 8 – Company Accounts – Accounting for Share Capital
- Chapter No. 9 – Company Accounts – Issue of Debentures
- Chapter No. 10 – Redemption of Debentures
T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)
- Chapter No. 1 – Financial Statements of a Company
- Chapter No. 2 – Financial Statement Analysis
- Chapter No. 3 – Tools of Financial Statement Analysis – Comparative Statements and Common- Size Statements
- Chapter No. 4 – Accounting Ratios
- Chapter No. 5 – Cash Flow Statement
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