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, 2026 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 (₹) |
|
|
2026 |
|
|
|
|
|
|
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) |
|
|
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|
|
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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 |
||
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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, 2026. Land (having book value of ₹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) |
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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, 2026 was as follows:
|
Liabilities |
₹ |
Assets |
₹ |
|
Pinky's Capital A/c |
54,000 |
Cash |
18,000 |
|
Rocky'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 ₹90,000 on 31st March, 2026. The partners decide to share profits equally with effect from 1st April, 2026.
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) |
|
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Working note:
1. Calculation of Gaining and Sacrificing Ratio
Pinky's sacrifice = Old Profit Share - New Profit Share = 3/5 - 1/2 = 1/10
Rocky’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:
Balance Sheet of X and Y, who share profits and losses as 5 : 3, as at 1st April, 2026 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:
2024− ₹ 7,500; 2025 − ₹ 4,000; 2026 − ₹
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 |
|
|
|
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|
Balance Sheet |
|||
|
as on April 01, 2026 (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) |
|
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Question 30:
Ram, Mohan, Sohan and Hari were partners in a firm sharing profits in the ratio of 4 : 3 : 2 : 1. On 1st April, 2016, their Balance Sheet was as follows:
|
BALANCE SHEET OF RAM, MOHAN, SOHAN AND HARI as on 1st April, 2016 |
||||
|
Liabilities |
₹ |
Assets |
₹ |
|
|
Capital A/cs: |
|
Fixed Assets |
9,00,000 |
|
|
Ram |
4,00,000 |
|
Current Assets |
5,20,000 |
|
Mohan |
4,50,000 |
|
|
|
|
Sohan |
2,50,000 |
|
|
|
|
Hari |
2,00,000 |
13,00,000 |
|
|
|
Workmen Compensation Reserve |
|
1,20,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,20,000 |
|
14,20,000 |
|
|
|
|
|
|
From the above date, the partners decided to share the future profits in the
ratio of 1 : 2 : 3 : 4. For this purpose the goodwill of the firm was valued
at ₹1,80,000. The partners also agreed for the following:
(a) The Claim
for workmen compensation has been estimated at ₹ 1,50,000.
(b) Adjust the capitals of the partners according to the new profit-sharing
ratio by opening Partners' Current Accounts.
Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet
of the reconstituted firm.
(Delhi2017)
Answer:
|
Revaluation Account |
||||
|
Dr. |
Cr. |
|||
|
Particulars |
(₹) |
Particulars |
(₹) |
|
|
Provision for Workmen Compensation Claim |
30,000 |
Revaluation Loss |
|
|
|
|
|
Ram’s Capital A/c |
12,000 |
|
|
|
|
Mohan’s Capital A/c |
9,000 |
|
|
|
|
Sohan’s Capital A/c |
6,000 |
|
|
|
|
Hari’s Capital A/c |
3,000 |
30,000 |
|
|
|
|
|
|
|
|
30,000 |
|
30,000 |
|
|
|
|
|
|
|
|
Partners’ Capital Account |
|||||||||
|
Dr. |
Cr. |
||||||||
|
Particulars |
Ram |
Mohan |
Sohan |
Hari |
Particulars |
Ram |
Mohan |
Sohan |
Hari |
|
Revaluation A/c |
12,000 |
9,000 |
6,000 |
3,000 |
Balance b/d |
4,00,000 |
4,50,000 |
2,50,000 |
2,00,000 |
|
Ram’s Capital A/c |
|
|
13,500 |
40,500 |
Sohan’s Capital A/c |
13,500 |
4,500 |
|
|
|
Mohan’s Capital A/c |
|
|
4,500 |
13,500 |
Hari’s Capital A/c |
40,500 |
13,500 |
|
|
|
Current A/c’s |
3,15,000 |
2,05,000 |
|
|
Current A/c’s |
|
|
1,55,000 |
3,65,000 |
|
Balance c/d |
1,27,000 |
2,54,000 |
3,81,000 |
5,08,000 |
|
|
|
|
|
|
|
4,54,000 |
4,68,000 |
4,05,000 |
5,65,000 |
|
4,54,000 |
4,68,000 |
4,05,000 |
5,65,000 |
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet |
|||||
|
Liabilities |
(₹) |
Assets |
(₹) |
||
|
Capital A/c |
|
Fixed Assets |
9,00,000 |
||
|
Ram |
1,27,000 |
|
Current Assets |
5,20,000 |
|
|
Mohan |
2,54,000 |
|
Current A/c |
|
|
|
Sohan |
3,81,000 |
|
Ram |
3,15,000 |
|
|
Hari |
5,08,000 |
12,70,000 |
Mohan |
2,05,000 |
5,20,000 |
|
Current A/c |
|
|
|
||
|
Sohan |
1,55,000 |
|
|
|
|
|
Hari |
3,65,000 |
5,20,000 |
|
|
|
|
Claim against WCF |
1,50,000 |
|
|
||
|
|
|
|
|
||
|
|
19,40,000 |
|
19,40,000 |
||
|
|
|
|
|
||
Working Notes
WN1: Calculation of
Gaining/Sacrificing Ratio
Old Ratio 4:3:2:1
New Ratio 1:2:3:4
Sacrificing Ratio=Old Ratio-New Ratio
Sacrificing Ratio of Ram=4/10-1/10=3/10(sacrificing)
Sacrificing Ratio of Mohan=3/10-2/10=1/10(sacrificing)
Gaining Ratio of Sohan=2/10-3/10=-1/10(gaining)
Gaining Ratio of Hari=1/10-4/10=-3/10(gaining)
(a) Sohan will compensate Ram and Mohan in the ratio 3:1
(b) Hari will compensate Ram and Mohan in the ratio of 3:1
Adjustment for Goodwill
|
Sohan’s Capital A/c |
Dr. |
|
18,000 |
|
|
Hari’s Capital A/c |
Dr. |
|
54,000 |
|
|
To Ram’s Capital A/c |
|
|
|
54,000 |
|
To Mohan’s Capital A/c |
|
|
|
18,000 |
|
(Being Sohan and Hari will compensate Ram and Mohan in their gaining ratio) |
|
|
|
|
WN2: Calculation of Adjusted Capital
Ram = 4,54,000 – 12,000 = ₹ 4,42,000
Mohan = 4,68,000 – 9,000 = ₹ 4,59,000
Sohan = 2,50,000 – 24,000 = ₹ 2,26,000
Hari = 2,00,000 – 57,000 = ₹ 1,43,000
Total Combined Capital = 12,70,000
WN3: Calculation of New Capital
Ram=12,70,000×1/10=1,27,000
Mohan=12,70,000×2/10=2,54,000
Sohan=12,70,000×3/10=3,81,000
Hari=12,70,000×4/10=5,08,000
Ts Grewal Solution 2026-2027
Click below for more Questions
Class 12 / Volume – I
Chapter 3 – Change in Profit-Sharing Ratio Among the Existing Partner