# DK Goel Solutions Vol 1 Chapter 2 Change in Profit Sharing Ratio Among the Existing Partners

DK Goel Accountancy Class 12 Solutions Chapter 2 Change in Profit Sharing Ratio Among the Existing Partners which is outlined by expert Accountancy teachers from the latest version of DK Goel Accountancy Class 12 textbook solutions. We at BYJUâ€™S provide DK Goel Solutions to assist students to comprehend all the theories in particular. There are numerous concepts in Accountancy, but the concepts of Admission of a partner, Accounting Ratios and Cash Flow Statement (As per AS – 3 Revised) is required.

## DK Goel Solutions Class 12 – Chapter 2 – Part A

Question 1

Charu and Divya are partners in a firm. Charu was to get a commission of 10% on the net profits before charging any commission. However, Divya was to get a commission of 10% on the net profits after charging all commissions. Fill in the missing figure in the following Profit and Loss Appropriation Account of the year ended 31st March 2018.

Solution:

 Dr. Profit and Loss Appropriation Account For the year ended 31st March 2018 Cr. Particular â‚¹ Particular â‚¹ To Charuâ€™s Commission (â‚¹â€¦.x 10 / 100) 44,000 To Divyaâ€™s Commission To Profit transferred to: Charuâ€™s Capital A/c Divyaâ€™s Capital A/c

Solution:

 Dr. Profit and Loss Appropriation Account For the year ended 31st March 2018 Cr. Particular â‚¹ Particular â‚¹ To Charuâ€™s Commission (â‚¹4,40,00 x 10 / 100) 44,000 By Profit & Loss A/c 4,40,000 To Divyaâ€™s Commission (â‚¹3,96,00 x 10 / 100) 36,000 To Profit transferred to: Charuâ€™s Capital A/c 1,80,000 Divyaâ€™s Capital A/c 1,80,000 3,60,000

Working Notes:

1. Calculation of profit before charging any commission

Charuâ€™scommission @ 10% on the net profits charging any commission = 44,000

Therefore, total profit before charging any commission = â‚¹44,000 x 100 / 10 – â‚¹4,40,000

2. Calculation of Divyaâ€™s Commission

Profit after charging Charuâ€™s commission= â‚¹3,96,000 (â‚¹4,40,000 – â‚¹44,000)

Commission of Divya = â‚¹ 3,96,000 x 10/ 110 = â‚¹36,000

Question 2

The total capital of the firm od Saurabh, Mohit and Nikhil was â‚¹1,00,000. The net profits for the last 3 years were: 2013-14 â‚¹40,000; 2014-15 â‚¹46,000 and 2015-16 â‚¹52,000. There was an abnormal loss of â‚¹3,000 in 2014-15. Goodwill of the firm was to be valued at 2 years purchase of the average profits of the last three years. Calculate the goodwill of the firm.

Solution:

 Total Profits of last years â‚¹ 2013- 14 40,000 2014-15 (â‚¹46,000 + Abnormal Loss â‚¹ 3,000) 49,000 2015-16 52,000

Average Profit = â‚¹1,41,000 / 3 = â‚¹47,000

Goodwill = Average Profit x Number of yearâ€™s purchase

= â‚¹47,00 x 2 = â‚¹94,000

Question 3

X, Y, and Z sharing profits and losses in the ratio 1:2:2, decided to share future profits equally with effect from 1st April 2016. On that date, the Profit and Loss Account showed a credit balance of â‚¹1,20,000. Partners do not want to distriv=bute the profit but prefer to record the change in the profit-sharing ratio by passing an adjustment entry. Yo are required to give the adjusting entry.

Solution:

Old Ration od X, Y, and Z 1/5: 2/5: 2/5

New Ration od X, Y, and Z 1/3: 1/3: 1/3

Sacrifice or Gain:

X= 1/5 – 1/3 = 3-5 / 15 = 2/15 (Gain)

Y= 2/5 – 1/3 = 6-5/ 15 = 1/ 15 (Sacrifice)

Z= 2/5 – 1/3 = 6-5/15 = 1/15 (Sacrifice)

 Date Particular L.F Dr. (â‚¹) Cr. (â‚¹) 2016 April 1 Xâ€™s Capital A/c (2/15 of 1,20,000) Dr. 16,000 To Yâ€™s Capital A/c (1/5 of 1,20,000) 8,000 To Zâ€™s Capital A/c (1/5 of 1,20,000) (Adjustment for Profit and Loss Account balance on change in profit sharing ratio.) 8,000

Question 4

A, B, C, and D are partners in firm sharing profits and losses in the ratio of 2:2:1:1. They decided to share profits in future in the ratio of 4:3:2:1. For this purpose goodwill of the firm was valued at â‚¹1,80,000. There was also a reserve of â‚¹60,000 in the books of the firm.

Find out the sacrifice and gaining ratio and pass necessary journal entry assuming that partners do not want to distribute the reserve.

Solution:

 Value of Goodwill â‚¹ 1,80,000 Reserve â‚¹ 60,000 2,40,000

Old Ratio of A, B, C and D 2:2:1:1

New Ratio of A, B, C and D 4:3:1:1

Sacrifice or Gain:

A= 2/6 – 4/10 = 10-12 / 30 = 2/30 (Gain)

B= 2/6 – 3/10 = 10-9/ 30 = 1/30 (Sacrifice)

C= 1/6 – 2/10 = 5-6/ 30 = 1/30 (SAcrifice)

D= 1/6 – 1/10 = 5-3/ 30 = 2/30 (Sacrifice)

 Date Particular L.F Dr. (â‚¹) Cr. (â‚¹) Aâ€™s Capital A/c (2/30 of 2,40,000) Dr. 16,000 Câ€™s Capital A/c (1/30 of 2,40,000) Dr. 8,000 To Bâ€™s Capital A/c (1/30 of 2,40,000) 8,000 To Dâ€™s Capital A/c (2/30 of 2,40,000) (Adjustment for Goodwill and reserve on change in profit sharing ratio.) 16,000

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 DK Goel Accountancy Solutions Class 12 â€“ Part A (Chapter wise) Chapter 1 Accounting for Partnership Firms â€“ Fundamentals Chapter 3 Admission of a partner Chapter 4 Retirement or Death of a Partner Chapter 5 Dissolution of a Partnership Firm

#### 1 Comment

1. Pranjul

Good app for learning