Question 16:
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, 2026. Workmen Compensation Reserve appears at ₹ 1,20,000 in the Balance Sheet as at 31st March, 2026 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 (₹) |
|
|
2026 |
|
|
|
|
|
|
|
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 17:
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 18:
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, 2026. The extract of their Balance Sheet as at 31st March, 2026 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 (₹) |
|
|
2026 |
|
|
|
|
|
|
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 19:
Anu, Manu, Sonu and Rohan were partners in a firm sharing profits and losses in the ratio of 1:2:1:2. With effect from 1st April, 2023, they decided to share profits and losses in the ratio of 2:4:1:3. Their Balance Sheet showed General Reserve of ₹ 90,000. The goodwill of the firm was valued at ₹ 4,50,000.
Pass necessary Journal entries for the above on account of change in the profit-sharing ratio. Show your working clearly.
(CBSE 2024)
Answer:
|
Date |
Particulars |
|
L.F. |
(Dr.) ₹ |
(Cr.) ₹ |
|
|
General Reserve |
Dr. |
|
90,000 |
|
|
|
To Anu’s Capital A/c |
|
|
|
15,000 |
|
|
To Manu’s Capital A/c |
|
|
|
30,000 |
|
|
To Sonu’s Capital A/c |
|
|
|
15,000 |
|
|
To Rohan's Capital A/c |
|
|
|
30,000 |
|
|
(Being General Reserve distributed) |
|
|
|
|
|
|
Anu’s Capital A/c |
Dr. |
|
15,000 |
|
|
|
Manu’s Capital A/c |
Dr. |
|
30,000 |
|
|
|
To Sonu’s Capital A/c |
|
|
|
30,000 |
|
|
To Rohan's Capital A/c |
|
|
|
15,000 |
|
|
(Being sacrificing partner compensated) |
|
|
|
|
Working Note:
WN 1: Calculation of Gaining and Sacrificing Ratio
|
Anu |
= |
1/6 |
- |
2/10 |
= |
5-6/30 |
= |
-1/30 |
|
Manu |
= |
2/6 |
- |
4/10 |
= |
10-12/30 |
= |
-2/30 |
|
Sonu |
= |
1/6 |
- |
1/10 |
= |
5-3/30 |
= |
2/30 |
|
Rohan |
= |
2/6 |
- |
3/10 |
= |
10-9/30 |
= |
1/30 |
WN 2: Calculation of Share of Goodwill
|
Anu |
= |
4,50,000×-1/30 |
= |
15,000 |
|
Manu |
= |
4,50,000×-2/30 |
= |
30,000 |
|
Sonu |
= |
4,50,000×2/30 |
= |
30,000 |
|
Rohan |
= |
4,50,000×1/30 |
= |
15,000 |
WN 3: Calculation of Share of General Reserve
|
Anu |
= |
90,000×-1/30 |
= |
15,000 |
|
Manu |
= |
90,000×-2/30 |
= |
30,000 |
|
Sonu |
= |
90,000×2/30 |
= |
15,000 |
|
Rohan |
= |
90,000×1/30 |
= |
30,000 |
Question 20:
Soham, Ashish, Vishesh and Rashi were partners in a firm sharing profits and losses in the ratio of 4:3:2:1. With effect from 1st April, 2023, they decided to share profits and losses in the ratio of 2:1:1 :1. Their Balance Sheet showed a General Reserve of ₹80,000. The goodwill of the firm was valued at ₹5,00,000.
Pass necessary Journal entries for the above on account of change in the profit-sharing ratio. Show your working clearly.
(CBSE 2024)
Answer:
|
Date |
Particulars |
|
L.F. |
(Dr.) ₹ |
(Cr.) ₹ |
|
|
General Reserve |
Dr. |
|
80,000 |
|
|
|
To Soham's Capital A/c |
|
|
|
32,000 |
|
|
To Ashish's Capital A/c |
|
|
|
24,000 |
|
|
To Vishesh’s Capital A/c |
|
|
|
16,000 |
|
|
To Rashi's Capital A/c |
|
|
|
8,000 |
|
|
(Being General Reserve distributed) |
|
|
|
|
|
|
Rashi's Capital A/c |
Dr. |
|
50,000 |
|
|
|
To Ashish's Capital A/c |
|
|
|
50,000 |
|
|
(Being sacrificing partner compensated) |
|
|
|
|
Working Note:
WN 1: Calculation of Gaining and Sacrificing Ratio
|
Soham |
= |
4/10 |
- |
2/5 |
= |
4-4/10 |
= |
0/10 |
|
|
Ashish |
= |
3/10 |
- |
1/5 |
= |
3-2/10 |
= |
1/10 |
Sacrifice |
|
Vishesh |
= |
2/10 |
- |
1/5 |
= |
2-2/10 |
= |
0/10 |
|
|
Rashi |
= |
1/10 |
- |
1/5 |
= |
1-2/10 |
= |
-1/10 |
Gain |
WN 2: Calculation of Share of Goodwill
|
Ashish |
= |
5,00,000×1/10 |
= |
50,000 |
|
Rashi |
= |
5,00,000×-1/10 |
= |
50,000 |
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