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 '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 17:
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, 2024. The extract of their Balance Sheet as at 31st March, 2024 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 ( `) |
|
|
2024 |
|
|
|
|
|
|
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) |
|
|
|
|
Question 18:
Bootstrap and Davy Jones are
partners sharing profits in the ratio of 2 : 1. On 31st March, 2024, 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:
(i) When General Reserve is not to be shown in the new Balance Sheet.
(ii) When General Reserve is to be shown in the new Balance Sheet.
Answer:
(i) If they do not want to show General Reserve in the
new Balance Sheet
|
Journal |
|||||
|
Date |
Particulars |
L.F. |
Debit ( `) |
Credit ( `) |
|
|
2024 |
|
|
|
|
|
|
|
To Amar’s
Capital A/c |
|
|
|
40,000 |
|
|
To Akhar’s
Capital A/c |
|
|
|
20,000 |
|
|
(Being
Adjustment of balance in General Reserve A/c in old ratio) |
|
|
|
|
Working Notes:
WN1 Calculation
of Share of General Reserve
Amar's share=60,000×2/3=40,000
Akhar's share=60,000×1/3=20,000
(ii) If they want to show General Reserve in the new
Balance Sheet
|
Journal |
|||||
|
Date |
Particulars |
L.F. |
Debit ( `) |
Credit ( `) |
|
|
2024 |
|
|
|
|
|
|
|
To Amar’s
Capital A/c |
|
|
|
4,000 |
|
|
(Being Adjustment
of balance in General Reserve A/c in sacrificing/gaining ratio) |
|
|
|
|
Working Notes:
WN1 Calculation
of Gain/Sacrfice
Sacrificing Ratio=Old Ratio-New Ratio
Amar=2/3-3/5=1/15(sacrifice)
Akhar=1/3-2/5=-1/15(gain)
WN2 Calculation
of Compensation by Akhar to Amar
Amount to be compensated=60,000×1/15=4,000
Question 19: Mita, Gopal and Farhan were partners sharing profits and losses in the ratio 3:2:1. On 31st March, 2018. they decided to change the profit-sharing ratio to 5: 3:2. On this date, the Balance Sheet showed deferred advertisement expenditure `30,000 and contingency reserve 9,000.
Goodwill was valued at `4,80,000. Pass the necessary Journal entries for the above transactions in the books of the firm on its reconstitution.
(CBSE 2019)
Answer;
|
Journal |
||||
|
Particulars |
L.F. |
Debit ( `) |
Credit ( `) |
|
|
Mitha’s Capital A/c Gopal’s Capital A/c Farhan’s Capital A/c
To Advertisement expenses a/c (Being Advertisement expenses A/c written off in old ratio) |
Dr. |
|
15,000 10,000 5,000 9,000 16,000 |
30,000 4,500 3,000 1,500 16,000 |
|
|
||||
|
Contingency reserve a/c |
Dr. |
|||
|
To Mitha’s Capital A/c To Gopal’s Capital A/c To Farhan’s Capital A/c (Being Contingency reserve A/c
distributed in old ratio) |
|
|||
|
Farhan’s Capital A/c To Gopal’s Capital A/c (Being capital of gainer and sacrificer’s
capital a/c adjusted with their share of goodwill in gaining and sacrificing
ratio) |
Dr. |
|||
WN-1
|
|
Mita
|
Gopal
|
Farhan
|
Old ratio
|
3
|
: 2
|
: 1
|
New ratio
|
5
|
: 3
|
: 2
|
Mita = 3/6-5/10=30-30/60=0/60
Gopal =2/6-3/10=20-18/60=2/60 (Scrifice)
Farhan=1/6-2/10=10-12/60=-2/60(Gain)
Goodwill of the firm=-4,80,000
Share of Gapal =4,80,000×2/60=`16,000
Share of Farhan =4,80,000×2/60=`16,000
WN-2
Adjustment of deferred
advertisement expenditure and contingency reserve
Advertisement
expenditure to be written off / debited (in old ratio 3;2;1)
Mita
= 30,000×3/6 =15,000
Gopal
= 30,000×2/6 =10,000
Farhan
= 30,000×1/6 = 5,000
Contingency
reserve to be Credited (in old ratio 3;2;1)
Mita
= 9,000×3/6 =4,500
Gopal
= 9,000×2/6 =3,000
Farhan
= 9,000×1/6 = 1,500
Question
20:
X Y and Z are sharing profits and losses in
the ratio of 5 :3:2. They decide to share future profits and losses in the
ratio of 2:3:5 with effect from 1st April, 2024. They also decide to record the
effect of the following accumulated profits, losses and reserves without
affecting their book values by passing a single entry.
|
|
Book Values (Rs.) |
|
General
Reserve |
6,000 |
|
Profit
& Loss A/c (Credit) |
24,000 |
|
Advertisement
Suspense A/c |
12,000 |
Pass
an Adjustment Entry.
Answer:
|
Journal |
|||||
|
Date |
Particulars |
L.F. |
Debit ` |
Credit ` |
|
|
April 1 |
Z’s
Capital A/c |
Dr. |
|
5,400 |
|
|
|
To
X's Capital A/c |
|
|
|
5,400 |
|
|
(Being
accumulated profits, losses and reserves without affecting) |
|
|
|
|
|
|
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Ts Grewal Solution 2024-2025
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Class 12 / Volume – I