Question 66 Chapter 2 of +2-A
66. The firm of Harry, Porter and Ali, who have been sharing profits in the ratio of 2 : 2: 1, have existed for some years. Ali wants that he should get equal share in the profits with Harry and Porter and he further wish that the change in the profit-sharing ratio should come into effect retrospectively were for the three years. Harry and Porter have agreement on this account.
| Year | 2015-16 | 2016-17 | 2017-18 |
| Profit | 2,20,000 | 2,40,000 | 2,90,000 |
Show adjustment of profits by means of a single adjustment Journal entry
The solution of Question 66 Chapter 2 of +2-A:
| Date | Particulars |
L.F. | Debit | Credit | |
| Harry’s Capital A/c | Dr | 50,000 | |||
| Porter’s Capital A/c | Dr | 50,000 | |||
| To Ali’s Capital A/c | 1,00,000 | ||||
| (Being adjustment made) | |||||
Working Note: –
| Statement Showing Adjustment of Profit required |
||||
| Particulars | Harry |
Porter |
Ali |
Total |
| 2015 – 16 (Profit sharing ratio i.e. 2:2:1) | 88,000 | 88,000 | 44,000 | 2,20,000 |
| 2016 – 17 (Profit sharing ratio i.e. 2:2:1) | 96,000 | 96,000 | 48,000 | 2,40,000 |
| 2017 – 18 (Profit sharing ratio i.e. 2:2:1) | 1,16,000 | 1,16,000 | 58,000 | 2,90,000 |
| wrongly Amount credited (Profit sharing ratio i.e. 2:2:1) | 3,00,000 | 3,00,000 | 1,50,000 | 7,50,000 |
| Less: Actual Amount to be credited (Profit sharing ratio i.e. 1:1:1) | 2,50,000 | 2,50,000 | 2,50,000 | 7,50,000 |
| 50, 000 | 50, 000 | -1,00,000 | – | |
|
Harry gets less amount, so we have to credit his capital a/c with difference amount |
Porter gets less amount, so we have to credit his capital a/c with difference amount
|
Ali get extra so we have to debit his capital a/c with difference amount |
||
Also, Check out the solved question of previous Chapters: –
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
