Question 19 Chapter 4 of +2-A
19. X and Y are partners sharing profits in the ratio of 2 : 1. On 31st March,
2019, their Balance Sheet showed General Reserve of 60,000. It was decided that in future they will share profits and losses in the ratio of 3 : 2. Pass necessary Journal entry in each of the following alternative cases:
- When General Reserve is not to be shown in the new Balance Sheet.
- When General Reserve is to be shown in the new Balance Sheet.
The solution of Question 19 Chapter 4 of +2-A
In the case I – When General Reserve is not to be shown in the new Balance Sheet.
| In the Books of _______________ | |||||
| Date | Particulars |
L.F. | Debit | Credit | |
| 2019 | |||||
| 31st March | General Reserve A/c | Dr | 60,000 | ||
| To X’s Capital A/c*1 | 40,000 | ||||
| To Y’s Capital A/c*1 | 20,000 | ||||
| (Being Adjustment for General Reserve) | |||||
Working Note :
WN *1 Calculation of Share of General Reserve –
| Amount to be Credited to X’s Capital | = | 60,000 | X | 2 |
| 3 | ||||
| = | 40,000 |
| Amount to be Credited to Y’s Capital | = | 60,000 | X | 1 |
| 3 | ||||
| = | 20,000 |
In the case II – When General Reserve is to be shown in the new Balance Sheet
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| In the Books of _______________ | |||||
| Date | Particulars |
L.F. | Debit | Credit | |
| 2019 | |||||
| April 1 | Y’s Capital A/c*1 | Dr | 4,000 | ||
| To X’s Capital A/c | 4,000 | ||||
| (Being Adjustment for General Reserve through Capital account) | |||||
Working Note :
WN *2 Calculation of Share of General Reserve –
| Old Ratio of X, & Y | = | 2 : 1 |
| New Ratio of X, & Y | = | 3 : 2 |
Calculate the Sacrificing or Gaining Ratio of Partners
Sacrificing or Gaining Ratio = Old Ratio – New Ratio
| X’s Sacrificing/Gaining share | = | 2 | – | 3 |
| 3 | 5 |
| = | 10- 9 | |
| 15 |
| = | 1 | (Sacrificing) |
|
| 15 |
| Y’s Share Sacrificing/Gaining | = | 1 | – | 2 |
| 3 | 5 |
| = | 5 – 6 | |
| 15 |
| = | – 1 | Gaining | |
| 15 |
| Amount to be Credited to X’s Capital | = | 60,000 | X | 1 |
| 15 | ||||
| = | 4,000 |
| Amount to be Credited to Y’s Capital | = | 60,000 | X | 1 |
| 15 | ||||
| = | 4,000 |
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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