Question 24 Chapter 4 of +2-A
24. A, B and C are sharing profits and losses in the ratio of 2 : 2 : 1. They decided to share profit w.e.f. 1st April, 2019 in the ratio of 5 : 3 : 2. They also decided not to change the values of assets and liabilities in the books of account. The book values and revised values of assets and liabilities as on the date of change were as follows:
| Book values | Revised values | |
| Machinery | 2,50,000 | 3,00,000 |
| Computers | 2,00,000 | 1,75,000 |
| Sundry Creditors | 90,000 | 75,000 |
| Outstanding Expenses | 15,000 | 25,000 |
Pass an adjustment entry
The solution of Question 24 Chapter 4 of +2-A
| In the Books of _______________ | |||||
| Date | Particulars |
L.F. | Debit | Credit | |
| A’s Capital A/c | Dr | 10,000 | |||
| To B’s Capital A/c*1 | 50,000 | ||||
| (Being adjustment make for the revaluation of assets and liabilities) | |||||
Working Note :
| Old Ratio of X, & Y | = | 2 : 2 : 1 |
| New Ratio of X, & Y | = | 5 : 3 : 2 |
Calculate the Sacrificing or Gaining Ratio of Partners
Sacrificing or Gaining Ratio = Old Ratio – New Ratio
| A’s Share Sacrificing/Gaining | = | 2 | – | 5 |
| 5 | 10 |
| = | 20 – 25 | |
| 50 |
| = | 5 | (Sacrificing) |
|
| 50 |
| B’s Share Sacrificing/Gaining | = | 2 | – | 2 |
| 5 | 10 |
| = | 20 – 15 | |
| 50 |
| = | 5 | Sacrifice |
|
| 50 |
| C’s Share Sacrificing/Gaining | = | 1 | – | 2 |
| 5 | 10 |
| = | 10- 10 | |
| 50 | ||
| = | Nil |
Calculation of Profit or Loss on Revaluation
| Revaluation A/c |
||||
| Particulars |
Amount | Particulars |
Amount | |
| To Computers A/c | 25,000 | By Machinery A/c | 50,000 | |
| To Outstanding expenses A/c | 10,000 | By Creditors A/c | 15,000 | |
| To Profit on Revaluation | 30,000 | |||
| 65,000 | 65,000 | |||
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WN *1 Adjustment of Profit on revaluation of in the sacrificing and gaining share: –
| Amount to be Credited to A’s Capital | = | 30,000 | X | 1 |
| 10 | ||||
| = | 3,000 |
| Amount to be Debited to B’s Capital | = | 30,000 | X | 1 |
| 10 | ||||
| = | 3,000 |
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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
Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication
