Question 32 Chapter 3 of Class 12 Part - 1 VK Publication

Question 32 Chapter 3 of Class 12 Part – 1

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The solution of Question 32 Chapter 3 of Class 12 Part – 1: –

Usha Publication – Accountancy PSEB (Class 12) – Volume I – Solution

Usha Publication – Accountancy PSEB (Class 12) – Volume II – Solution

32. X, Y and Z were sharing profits and losses in the ratio of 5:3:2. They decided to share future profits and losses in the ratio of 2:3:5 with effect from 1st April, 2018 record the effect of the following, without affecting their book values:
(i) Profit and Loss Account Rs. 24,000 and (ii) Advertisement Suspense Account Rs. 12,000
Pass necessary adjusting journal entry.

The solution of Question 32 Chapter 3 of Class 12 Part – 1: –

Total Profit = 60,000+1,50,000+1,70,000+1,90,000-70,000 = Rs. 5,00,000

Average Profit	=	5,00,000
		5

= Rs. 1,00,000

Goodwill at three years’ purchase= 1,00,000 x 3 = Rs . 3,00,000
Effect of change in profit sharing ratio:

Particulars	X	Y	Z
Partners’ Old Ratio	5/10	3/10	2/10
Partners’ New Ratio	2/10	3/10	5/10
Difference	3/10	NIL	(-3)/10
Net Effect	Sacrifice	No Effect	Gain

Amount to be Adjusted:

Profit and Loss Account=	Rs. 24,000
Less: Advertisement Suspense Account=	Rs. 12,000
	Rs. 12,000

Amount of compensation= 12,000 x 3/10= Rs. 3,600

Journal Entry

Date	Particulars		L . F	Dr. ₹	Cr. ₹
2018	Z’s Capital A/c	Dr.		3,600
April 1	To X’s Capital A/c				3,600
	( Being adjustment of amount on change in profit sharing ratio)