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12th | Change in Profit Sharing Ratio Among the Existing Partner | Question No. 16 To 20 | Ts Grewal Solution 2023-2024

Question 16:


A, B and C who are presently sharing profits and losses in the ratio of 5 : 3 : 2 decide to share future profits and losses in the ratio of 2 : 3 : 5. Give the Journal entry to distribute 'Workmen Compensation Reserve' of  ` 1,20,000 at the time of change in profit-sharing ratio, when:
(i) no information is given; (ii) there is no claim against it.

Answer:

(i) & (ii)

Journal

Date

Particulars

L.F.

Debit

 ( `)

Credit

 ( `)

 

 

 

 

 

 

 

Workmen Compensation Reserve A/c

Dr.

 

1,20,000

 

 

      To A’s Capital A/c

 

 

 

60,000

 

      To B’s Capital A/c

 

 

 

36,000

 

      To C’s Capital A/c

 

 

 

24,000

 

(Being Workmen Compensation Reserve distributed)

 

 

 

 

 

Note:

In the both the cases, Workmen Compensation Reserve should be distributed in old ratio i.e., 5:3:2.

Question 17:


X, Y and Z who are presently sharing profits and losses in the ratio of 5 : 3 : 2 decide to share future profits and losses in the ratio of 2 : 3 : 5. Give the journal entry to distribute 'Workmen Compensation Reserve' of  ` 1,20,000 at the time of change in profit-sharing ratio, when there is a claim of  ` 80,000 against it.

Answer:

Journal

Date

Particulars

L.F.

Debit

 ( `)

Credit

 ( `)

 

Workmen Compensation Reserve A/c

Dr.

 

1,20,000

 

 

  To X’s Capital A/c

 

 

 

20,000

 

  To Y’s Capital A/c

 

 

 

12,000

 

  To Z’s Capital A/c

 

 

 

8,000

 

  To Workmen Compensation Claim A/c

 

 

 

80,000

 

(Being Adjustment of balance in Workmen Compensation Reserve A/c in old ratio)

 

 

 

 

Working Notes:

WN1 Calculation of Share of Workmen Compensation Reserve
X's share=40,000×5/10=20,000

Y's share=40,000×3/10=12,000

Z's share=40,000×2/10=8,000

Question 18:


Ashok, Bhim and Chetan who are sharing profits in the ratio of 5 : 3 : 2, decide to share profits in the ratio of 2 : 3 : 5 with effect from 1st April, 2023. Workmen Compensation Reserve appears at  ` 1,20,000 in the Balance Sheet as at 31st March, 2023 and Workmen Compensation Claim is estimated at  ` 1,50,000. Pass Journal entries for the accounting treatment of Workmen Compensation Reserve. 

Answer:

Journal

Date

Particulars

L.F.

Debit

 ( `)

Credit

 ( `)

2023
April 1

 

 

 

 

 

 

Workmen Compensation Reserve A/c

Dr.

 

1,20,000

 

 

Revaluation A/c

Dr.

 

30,000

 

 

    To Provision for Workmen Compensation Claim A/c

 

 

 

1,50,000

 

(Being Provision created and shortfall charged to Revaluation A/c)

 

 

 

 

 

 

 

 

 

 

 

Ashok’s Capital A/c

Dr.

 

15,000

 

 

Bhim’s Capital A/c

Dr.

 

9,000

 

 

Chetan’s Capital A/c

Dr.

 

6,000

 

 

    To Revaluation A/c

 

 

 

30,000

 

(Being Loss on revaluation transferred to Partners’ Capital A/c)

 

 

 

 

 

Question 19:


A, B and C who are presently sharing profits and losses in the ratio of 5 : 3 : 2 decide to share future profits and losses in the ratio of 2 : 3 : 5. Give the journal entry to distribute 'Investments Fluctuation Reserve' of  ` 20,000 at the time of change in profit-sharing ratio, when investment (market value  ` 95,000) appears in the books at  ` 1,00,000.

Answer:

Journal

Date

Particulars

L.F.

Debit

 ( `)

Credit

 ( `)

 

Investment Fluctuation Reserve A/c

Dr.

 

5,000

 

 

  To Investments A/c

 

 

5,000

 

(Being Adjustment for decrease in the value of investments)

 

 

 

 

 

 

 

 

 

 

Investment Fluctuation Reserve A/c

Dr.

 

15,000

 

 

  To A’s Capital A/c

 

 

 

7,500

 

  To B’s Capital A/c

 

 

 

4,500

 

  To C’s Capital A/c

 

 

 

3,000

 

(Being Adjustment of balance in Investment Fluctuation Reserve A/c in old ratio)

 

 

 

 

Working Notes:
WN1 Calculation of Share of Investment Fluctuation Reserve
A's share=15,000×5/10=7,500

B's share=15,000×3/10=4,500

C's share=15,000×2/10=3,000

Question 20:


Nitin, Tarun and Amar are partners sharing profits equally and decide to share profits in the ratio of 2 : 2 : 1 w.e.f. 1st April, 2023. The extract of their Balance Sheet as at 31st March, 2023 is as follows:

Liabilities

 ` 

 Assets

 ` 

Investments Fluctuation Reserve

60,000

Investments (At Cost)

4,00,000

Pass the Journal entries in each of the following situations:
(i) When its Market Value is not given;
(ii) When its Market Value is  ` 4,00,000;
(iii) When its Market Value is  ` 4,24,000;
(iv) When its Market Value is  ` 3,70,000;
(v) When its Market Value is  ` 3,10,000.

Answer:


Journal

Date
 

Particulars

L.F.

Debit

 ( `)

Credit

 ( `)

2023

 

 

 

 

 

April 1

Investment Fluctuation Reserve A/c

Dr.

 

60,000

 

 

   To Nitin’s Capital A/c

 

 

 

20,000

 

   To Tarun’s Capital A/c

 

 

 

20,000

 

   To Amar’s Capital A/c

 

 

 

20,000

 

(Being Investment Fluctuation Reserve distributed)

 

 

 

 

 

 

 

 

 

 

 

Investment Fluctuation Reserve A/c

Dr.

 

60,000

 

 

   To Nitin’s Capital A/c

 

 

 

20,000

 

   To Tarun’s Capital A/c

 

 

 

20,000

 

   To Amar’s Capital A/c

 

 

 

20,000

 

(Being Investment Fluctuation Reserve distributed)

 

 

 

 

 

 

 

 

 

 

 

Investment Fluctuation Reserve A/c

Dr.

 

60,000

 

 

   To Nitin’s Capital A/c

 

 

 

20,000

 

   To Tarun’s Capital A/c

 

 

 

20,000

 

   To Amar’s Capital A/c

 

 

 

20,000

 

(Being Investment Fluctuation Reserve distributed)

 

 

 

 

 

 

 

 

 

 

 

Investments A/c

Dr.

 

24,000

 

 

    To Revaluation A/c

 

 

 

24,000

 

(Being Investments revalued)

 

 

 

 

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

24,000

 

 

   To Nitin’s Capital A/c

 

 

 

8,000

 

   To Tarun’s Capital A/c

 

 

 

8,000

 

   To Amar’s Capital A/c

 

 

 

8,000

 

(Being Revaluation profit transferred to Partners’ Capital A/c)

 

 

 

 

 

 

 

 

 

 

 

Investment Fluctuation Reserve A/c

Dr.

 

60,000

 

 

   To Investment A/c

 

 

 

30,000

 

   To Nitin’s Capital A/c

 

 

 

10,000

 

   To Tarun’s Capital A/c

 

 

 

10,000

 

   To Amar’s Capital A/c

 

 

 

10,000

 

(Being Investment Fluctuation Reserve distributed)

 

 

 

 

 

 

 

 

 

 

 

Investment Fluctuation Reserve A/c

Dr.

 

60,000

 

 

Revaluation A/c

Dr.

 

30,000

 

 

     To Investment A/c

 

 

 

90,000

 

(Decrease in investments set off against IFR and balance debited to Revaluation A/c)

 

 

 

 

 

 

 

 

 

 

 

Nitin’s Capital A/c

Dr.

 

10,000

 

 

Tarun’s Capital A/c

Dr.

 

10,000

 

 

Amar’s Capital A/c

Dr.

 

10,000

 

 

      To Revaluation A/c

 

 

 

30,000

 

(Being Loss on revaluation transferred to Partners’ Capital A/c)

 

 

 

 

 

Ts Grewal Solution 2023-2024

Click below for more Questions

Class 12 / Volume – I

Chapter 3 – Change in Profit-Sharing Ratio Among the Existing Partner

 

Question No. 1 To 5
Question No. 6 To 10
Question No. 11 To 15
Question No. 16 To 20
Question No. 21 To 25
Question No. 26 To 30

Question No. 31 To 33