Question
26:
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, 2025 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.
Answer:
|
Journal |
|||||
|
Date |
Particulars |
L.F. |
Debit (₹) |
Credit (₹) |
|
|
2024 |
|
|
|
|
|
|
April 1 |
A’s Capital
A/c (30,000×110=3,000) |
Dr. |
|
3,000 |
|
|
|
To B’s Capital
A/c |
|
|
|
3,000 |
|
|
(Being Adjustment entry made for
change in ratio) |
|
|
|
|
|
|
|
|
|
|
|
Working
Notes:
WN1: Calculation of Sacrifice or Gain
A:B:C=2:2:1(Old Ratio)
A:B:C=5:3:2(New Ratio)
Sacrificing (or Gaining Ratio) = Old Ratio - New Ratio
A's share=2/5−5/10=4−5/10=−1/10(Gain)
B's share=2/5−3/10=4−3/10=1/10(Sacrifice)
C's share=1/5−2/10=2−2/10=0
WN2: Calculation of Profit or Loss on Revaluation
|
Revaluation
A/c |
|||||
|
Dr. |
|
Cr. |
|||
|
Particulars |
(₹) |
Particulars |
(₹) |
||
|
Computers A/c |
25,000 |
Machinery A/c |
50,000 |
||
|
Outstanding expenses A/c |
10,000 |
Creditors A/c |
15,000 |
||
|
Profit on Revaluation |
30,000 |
|
|
||
|
|
|
|
|
||
|
|
65,000 |
|
65,000 |
||
|
|
|
|
|
||
Question
27:
Ajeet, Vijeet and Sujeet are partners in
a firm sharing profits and losses in the ratio of 5:3:2.They decide
to share profits and losses in the ratio of 2:5:3 with effect from 1st April, 2025.
Land (having book value of Rs. 1,00,000) was found
undervalued by 2,50,000 and stock (having book value of ? 4,00,000) was found
overvalued by 3,00,000.
Pass the necessary adjusting entry without affecting
the existing book value.
Answer:
|
Journal |
|||||
|
Date |
Particulars |
L.F. |
Debit ₹ |
Credit ₹ |
|
|
April
1 |
Ajeet's
Capital A/c |
Dr. |
|
15,000 |
|
|
|
To Vijeet's Capital A/c |
|
|
|
10,000 |
|
|
To Sujeet's Capital A/c |
|
|
|
5,000 |
|
|
(Being
accumulated profits, losses and reserves without affecting) |
|
|
|
|
|
|
|
|
|
||
Question
28:
Pinky and
Rocky are partners in a firm sharing profit in the ratio of 3:2. Their Balance
Sheet as at 31st March, 2025 was as follows:
|
Liabilities |
Rs. |
Assets |
Rs. |
|
Rajesh's Capital A/c |
54,000 |
Cash |
18,000 |
|
Mahesh's Capital A/c |
36,000 |
Machinery |
36,000 |
|
Creditors |
36,000 |
Building |
72,000 |
|
|
1,26,000
|
|
1,26,000 |
Goodwill of the firm is valued at 36,000 and the
building at Rs. 90,000 on 31st March, 2025. The partners decide to share
profits equally with effect from 1st April, 2024.
Pass the necessary accounting entries without
affecting the existing figure of building.
Answer:
|
Journal |
|||||
|
Date |
Particulars |
L.F. |
Debit ₹ |
Credit ₹ |
|
|
|
Rocky 's Capital A/c |
Dr. |
|
3,600 |
|
|
|
To Pinky 's Capital A/c |
|
|
|
3,600 |
|
|
(Being Goodwill is Raised) |
|
|
|
|
|
|
Rocky 's Capital A/c |
Dr. |
|
1,800 |
|
|
|
To Pinky's Capital A/c |
|
|
|
1,800 |
|
|
(Being
Goodwill is written off) |
|
|
|
|
|
|
|
|
|
|
|
Working note:
1. Calculation of Gaining and Sacrificing Ratio
Rajesh's sacrifice = Old Profit Share - New Profit
Share = 3/5 - 1/2 = 1/10
Mahesh's gain = New Profit Share - Old Profit Share
= 1/2 - 2/5 = 1/10
2. Valued Goodwill adjusted
Share in Goodwill = 36,000×1/10=3,600
3. For
Appreciation in Value of Building: 90,000-72,000=18,000
Share = 18,000×1/10=1,800
Question
29: A, B and C were partners in a firm sharing profits in
the ratio of 3 : 2 : 1. Their Balance Sheet as on 31st
March, 2015 was as follows:
|
|
|
|||
|
Liabilities |
(₹) |
Assets |
(₹) |
|
|
Creditors |
50,000 |
Land |
50,000 |
|
|
Bills
Payable |
20,000 |
Building |
50,000 |
|
|
General
Reserve |
30,000 |
Plant |
1,00,000 |
|
|
Capital
A/cs: |
|
Stock |
40,000 |
|
|
A |
1,00,000 |
|
Debtors |
30,000 |
|
B |
50,000 |
|
Bank |
5,000 |
|
C |
25,000 |
1,75,000 |
|
|
|
|
2,75,000 |
|
2,75,000 |
|
|
|
|
|
|
|
From 1st April, 2015, A, B
and C decided to share profits equally. For this it was agreed that:
(i) Goodwill of the firm will be valued at ₹
1,50,000.
(ii) Land will be revalued at ₹ 80,000 and building be depreciated
by 6%.
(iii) Creditors of ₹ 6,000 were not likely to be claimed and hence
should be written off.
Prepare Revaluation Account, Partners' Capital Accounts and Balance Sheet of
the reconstituted firm.
Answer:
|
Revaluation Account |
||||
|
Dr. |
Cr. |
|||
|
Particulars |
(₹) |
Particulars |
(₹) |
|
|
Building
A/c |
3,000 |
Land
A/c |
30,000 |
|
|
Revaluation
Profit |
|
Creditors
A/c |
6,000 |
|
|
A |
16,500 |
|
|
|
|
B |
11,000 |
|
|
|
|
C |
5,500 |
33,000 |
|
|
|
|
|
|
|
|
|
|
36,000 |
|
36,000 |
|
|
|
|
|
|
|
|
Partners’ Capital Account |
|||||||
|
Dr. |
Cr. |
||||||
|
Particulars |
A |
B |
C |
Particulars |
A |
B |
C |
|
A’s
Capital A/c |
- |
- |
25,000 |
Balance
b/d |
1,00,000 |
50,000 |
25,000 |
|
Balance
c/d |
1,56,500 |
71,000 |
10,500 |
R/v
Profit |
16,500 |
11,000 |
5,500 |
|
|
|
|
|
General
Reserve |
15,000 |
10,000 |
5,000 |
|
|
|
|
|
C’s
Capital A/c |
25,000 |
- |
- |
|
|
1,56,500 |
71,000 |
35,500 |
|
1,56,500 |
71,000 |
35,500 |
|
|
|
|
|
|
|
|
|
|
Balance Sheet as on March 31, 2015 |
|||||
|
Liabilities |
(₹) |
Assets |
(₹) |
||
|
Capital
A/c |
|
Land |
50,000 |
|
|
|
A |
1,56,500 |
|
Add: Increase |
30,000 |
80,000 |
|
B |
71,000 |
|
Building |
50,000 |
|
|
C |
10,500 |
2,38,000 |
Less: Dep. |
3,000 |
47,000 |
|
|
|
Plant |
1,00,000 |
||
|
Creditors |
50,000 |
|
Bank |
5,000 |
|
|
Less: Written-off |
6,000 |
44,000 |
Stock |
40,000 |
|
|
Bills
Payable |
20,000 |
Debtors |
30,000 |
||
|
|
|
|
|
||
|
|
3,02,000 |
|
3,02,000 |
||
|
|
|
|
|
||
Working Notes
A's share=3/6−1/3 = 1/6
(Sacrifice)
B's share=2/6−1/3 = Nil
C's share=1/6−1/3 = -1/6
(Gain)
C will compensate by passing an entry
|
C’s
capital a/c To A’s capital a/c |
Dr. |
25,000 |
25,000 |
Question
30:
Balance
Sheet of X and Y, who share profits and losses as 5 : 3, as at 1st April, 2025 is:
|
|
|||
|
Liabilities |
(₹) |
Assets |
(₹) |
|
X's Capital |
52,000 |
Goodwill |
8,000 |
|
Y's Capital |
54,000 |
Machinery |
38,000 |
|
General
Reserve |
4,800 |
Furniture |
15,000 |
|
Sundry
Creditors |
5,000 |
Sundry
Debtors |
33,000 |
|
Employees'
Provident Fund |
1,000 |
Stock |
7,000 |
|
Workmen
Compensation Reserve |
10,000 |
Bank |
25,000 |
|
|
|
Advertisement
Suspense A/c |
800 |
|
|
|
|
|
|
|
1,26,800 |
|
1,26,800 |
|
|
|
|
|
On the above date, they decided to change their profit-sharing ratio to 3 : 5 and agreed upon the following:
(a) Goodwill be valued on the basis of two years' purchase of the average
profit of the last three years. Profits for the years ended 31st March, are: 2023−
₹ 7,500; 2024 − ₹ 4,000; 2025 − ₹ 6,500.
(b) Machinery and Stock be revalued at ₹ 45,000 and ₹
8,000 respectively.
(c) Claim on account of workmen compensation is ₹ 6,000.
Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet
of the new firm.
Answer:
|
Revaluation Account |
||||
|
Dr. |
Cr. |
|||
|
Particulars |
(₹) |
Particulars |
(₹) |
|
|
Profit
transferred to: |
|
Machinery |
7,000 |
|
|
X’s
Capital A/c |
5,000 |
|
Stock |
1,000 |
|
Y’s
Capital A/c |
3,000 |
8,000 |
|
|
|
|
8,000 |
|
8,000 |
|
|
|
|
|
|
|
|
||||
|
Partners’ Capital Account |
|||||
|
Dr. |
Cr. |
||||
|
Particulars |
X |
Y |
Particulars |
X |
Y |
|
Advertisement
Suspense A/c |
500 |
300 |
Balance
b/d |
52,000 |
54,000 |
|
Goodwill
A/c |
5,000 |
3,000 |
General
Reserve A/c |
3,000 |
1,800 |
|
X’s
Capital |
– |
3,000 |
WCF |
2,500 |
1,500 |
|
(Adjustment
of Goodwill) |
|
|
Revaluation
A/c (Profit) |
5,000 |
3,000 |
|
|
|
|
Y’s
Capital A/c |
3,000 |
– |
|
Balance
c/d |
60,000 |
54,000 |
(Adjustment
of Goodwill) |
|
|
|
|
|
|
|
|
|
|
|
65,500 |
60,300 |
|
65,500 |
60,300 |
|
|
|
|
|
|
|
|
Balance Sheet |
|||
|
as on April 01, 2025 (after Change in Profit
Sharing Ratio) |
|||
|
Liabilities |
(₹) |
Assets |
(₹) |
|
X’s
Capital |
58,500 |
Machinery
(38,000
+ 7,000) |
45,000 |
|
Z’s
Capital |
55,500 |
Furniture |
15,000 |
|
Sundry
Creditors |
5,000 |
Sundry
Debtors |
33,000 |
|
Employees’
Provident Fund |
1,000 |
Stock
(7,000 + 1,000) |
8,000 |
|
Workmen’s
Compensation Reserve |
6,000 |
Bank |
25,000 |
|
|
1,26,000 |
|
1,26,000 |
|
|
|
|
|
Working Notes:
WN 1Calculation of Sacrificing (or Gaining) Ratio
Old Ratio (X and Y) = 5 :
3
New Ratio (X and Y) = 3 :
5
Sacrificing (or Gaining) Ratio = Old Ratio
− New Ratio
X's share=5/8−3/8=2/8
(Sacrifice)
Y's share=3/8−5/8=−2/8
(Gain)
WN 2Calculation of New Goodwill
Goodwill = Average Profit × Number of
Year′s Purchase = 6,000 × 2 = ₹ 12,000
Average profit=
7,500+4,000+6,500/3=6,000
∴Goodwill = 6,000 × 2 = ₹ 12,000
WN 3Adjustment of Goodwill
Amount to be debited to X’s capital=12,000×2/8
=3,000
Amount to be debited to Y’s capital=12,000×2/8
=3,000
|
Journal |
|||||
|
Date |
Particulars |
L.F. |
Debit (₹) |
Credit (₹) |
|
|
|
Workmen’s
Compensation Reserve A/c |
Dr. |
|
10,000 |
|
|
|
To Workmen’s
Compensation Claim A/c |
|
|
6,000 |
|
|
|
To X’s Capital A/c |
|
|
2,500 |
|
|
|
To Y’s Capital A/c |
|
|
1,500 |
|
|
|
(Being
Workmen’s compensation claim distributed among partners in their old ratio
i.e. 5 : 3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
X’s
Capital A/c |
Dr. |
|
5,000 |
|
|
|
Y’s
Capital A/c |
Dr. |
|
3,000 |
|
|
|
To Goodwill A/c |
|
|
8,000 |
|
|
|
(Being
Goodwill written off among partners in their old ratio) |
|
|
|
|
|
|
|
|
|
|
|
|
|
X’s
Capital A/c |
Dr. |
|
500 |
|
|
|
Y’s
Capital A/c |
Dr. |
|
300 |
|
|
|
To Advertisement
Suspense A/c |
|
|
800 |
|
|
|
(Being
Advertisement Suspense written off among partners in their old ratio) |
|
|
|
|
|
|
|
|
|
|
|
|
|
General
Reserve A/c |
Dr. |
|
4,800 |
|
|
|
To X’s Capital A/c |
|
|
3,000 |
|
|
|
To Y’s Capital A/c |
|
|
1,800 |
|
|
|
(Being
General Reserve distributed among partners in their old ratio) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revaluation
A/c |
Dr. |
|
8,000 |
|
|
|
To X’s Capital A/c |
|
|
5,000 |
|
|
|
To Y’s Capital A/c |
|
|
3,000 |
|
|
|
(Being
Revaluation profit distributed among partners in their old ratio) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Y’s
Capital A/c |
Dr. |
|
3,000 |
|
|
|
To X’s Capital A/c |
|
|
3,000 |
|
|
|
(Being
Adjustment of goodwill made) |
|
|
|
|
|
|
|
|
|
|
|
Ts Grewal Solution 2025-2026
Click below for more Questions
Class 12 / Volume – I
Chapter 3 – Change in Profit-Sharing Ratio Among the Existing Partner