TS Grewal Solutions for Class 12 Accountancy Vol 1 Chapter 4
TS Grewal Solutions for Class 12 Accountancy Chapter 4 – Change in Profit â€“ Sharing Ratio Among the Existing Partners is considered to be an essential concept to be learnt completely by the students. Here, we have provided TS Grewal Accountancy solutions for class 12 in a simple and a step by step manner, which is helpful for the students to score well in their upcoming board examinations.
Class 12 TS Grewal Solutions Accountancy Vol 1 Chapter 4
Question 1
A and B are sharing profits and losses equally. With effect from 1st April, 2019, they agree to share profits in the ratio of 4 : 3. Calculate individual partner’s gain or sacrifice due to the change in ratio.
Solution:
Old Ratio (A & B) = 1 : 1
New Ratio (A & B) = 4 : 3
Sacrificing or Gaining Ratio = Old Ratio âˆ’ New Ratio
Aâ€™s share = \(\frac{1}{2}\) – \(\frac{4}{7}\) = \(\frac{78}{14}\) = \(\frac{1}{14}\)
Bâ€™s share = \(\frac{1}{2}\) – \(\frac{3}{7}\) = \(\frac{76}{14}\) = \(\frac{1}{14}\)
So, Aâ€™s gain and Bâ€™s sacrifice = \(\frac{1}{14}\) share
Question 2
X, Y and Z are sharing profits and losses in the ratio of 5 : 3 : 2. With effect from 1st April, 2019, they decide to share profits and losses in the ratio of 5 : 2 : 3. Calculate each partner’s gain or sacrifice due to the change in ratio.
Solution:
Old Ratio (X, Y, and Z) = 5 : 3 : 2
New Ratio (X, Y, and Z) = 5 : 2 : 3
Sacrificing or Gaining Ratio = Old Ratio âˆ’ New Ratio
Xâ€™s share = \(\frac{5}{10}\) – \(\frac{5}{10}\) = 0
Yâ€™s share = \(\frac{3}{10}\) – \(\frac{2}{10}\) = \(\frac{1}{10}\) (Sacrifice)
Zâ€™s share = \(\frac{2}{10}\) – \(\frac{3}{10}\) = \(\frac{1}{10}\) (Gain)
So, Zâ€™s Gain = \(\frac{1}{10}\) and Yâ€™s Sacrifice = \(\frac{1}{10}\)
Question 3
X, Y and Z are sharing profits and losses in the ratio of 5 : 3 : 2. With effect from 1st April, 2019, they decide to share profits and losses equally. Calculate each partner’s gain or sacrifice due to the change in ratio.
Solution:
Old Ratio (X, Y, and Z) = 5 : 3 : 2
New Ratio (X, Y, and Z) = 1 : 1 : 1
Sacrificing or Gaining Ratio = Old Ratio âˆ’ New Ratio
Xâ€™s share = \(\frac{5}{10}\) – \(\frac{1}{3}\) = \(\frac{1510}{30}\) = \(\frac{5}{30}\) (Sacrifice)
Yâ€™s share = \(\frac{3}{10}\) – \(\frac{1}{3}\) = \(\frac{910}{30}\) = \(\frac{1}{30}\) (Gain)
Zâ€™s share = \(\frac{2}{10}\) – \(\frac{1}{3}\) = \(\frac{610}{30}\) = \(\frac{4}{30}\) (Gain)
So, Yâ€™s Gain = \(\frac{1}{30}\) , Zâ€™s Gain = \(\frac{4}{30}\) , and Xâ€™s Sacrifice = \(\frac{5}{30}\)
Question 4
A, B and C are partners sharing profits and losses in the ratio of 5 : 4 : 1. Calculate new profitsharing ratio, sacrificing ratio and gaining ratio in each of the following cases:
Case 1. C acquires 1/5th share from A.
Case 2. C acquires 1/5th share equally form A and B.
Case 3. A, B and C will share future profits and losses equally.
Case 4. C acquires 1/10th share of A and 1/2 share of B.
Solution:
Calculation of New Profit Sharing Ratio
Case 1:
A:B:C = 5:4:1(Old Ratio)
C acquires \(\frac{1}{5}\)th from A
A’s sacrifice = \(\frac{1}{5}\)th
C’s gain = \(\frac{1}{5}\)th
As share = \(\frac{5}{10}\) – \(\frac{1}{5}\) = \(\frac{52}{10}\) = \(\frac{3}{10}\)
Bâ€™s share = \(\frac{4}{10}\)
Câ€™s share = \(\frac{1}{10}\) – \(\frac{1}{5}\) = \(\frac{1+2}{10}\) = \(\frac{3}{10}\)
A:B:C = 3:4:3
Case 2:
A:B:C = 5:4:1(Old Ratio)
C acquires \(\frac{1}{5}\)th equally from A and B
A’s sacrifice = \(\frac{1}{10}\)th
B’s sacrifice = \(\frac{1}{10}\)th
C’s gain = \(\frac{1}{5}\)th
Aâ€™s share = \(\frac{5}{10}\) – \(\frac{1}{10}\) = \(\frac{51}{10}\) = \(\frac{4}{10}\)
Bâ€™s share = \(\frac{4}{10}\) – \(\frac{1}{10}\) = \(\frac{41}{10}\) = \(\frac{3}{10}\)
Câ€™s share = \(\frac{1}{10}\) – \(\frac{1}{5}\) = \(\frac{1+2}{10}\) = \(\frac{3}{10}\)
A:B:C = 4:3:3
Case 3:
A:B:C = 5:4:1(Old Ratio)
A:B:C = 1:1:1 (New Ratio)
Aâ€™s share = \(\frac{5}{10}\) – \(\frac{1}{3}\) = \(\frac{1510}{30}\) = \(\frac{5}{30}\) (Sacrifice)
Bâ€™s share = \(\frac{4}{10}\) – \(\frac{1}{3}\) = \(\frac{1210}{30}\) = \(\frac{2}{30}\) (Sacrifice)
Câ€™s share = \(\frac{1}{10}\) – \(\frac{1}{3}\) = \(\frac{310}{30}\) = – \(\frac{3}{10}\) (Gain)
Case 4:
A:B:C = 5:4:1(Old Ratio)
A’s sacrifice to C = \(\frac{5}{10}\) X \(\frac{1}{10}\) = \(\frac{1}{20}\)
B’s sacrifice to C = \(\frac{4}{10}\) X \(\frac{1}{2}\) = \(\frac{4}{20}\)
C’s gain = \(\frac{1}{20}\) X \(\frac{4}{20}\) = \(\frac{5}{20}\)
Aâ€™s share = \(\frac{5}{10}\) – \(\frac{1}{20}\) = \(\frac{101}{20}\) = \(\frac{9}{20}\)
Bâ€™s share = \(\frac{4}{10}\) – \(\frac{4}{20}\) = \(\frac{84}{20}\) = \(\frac{4}{20}\)
Câ€™s share = \(\frac{1}{10}\) – \(\frac{5}{20}\) = \(\frac{5+2}{20}\) = – \(\frac{7}{20}\)
A:B:C = 9:4:7
Question 5
A, B and C shared profits and losses in the ratio of 3 : 2 : 1 respectively. With effect from 1st April, 2019, they agreed to share profits equally. The goodwill of the firm was valued at â‚¹ 18,000. Pass necessary Journal entries when: (a) Goodwill is adjusted through Partners’ Capital Accounts; and (b) Goodwill is raised and written off.
Solution:
Case a)
Journal  
Date  Particular  L.F.  Debit â‚¹  Credit â‚¹  
1st April  Câ€™s Capital A/c (18,000Ã—1/6)  Dr.  3,000  
To Aâ€™s Capital A/c (18,000Ã—1/6)  3,000  
(Goodwill Adjustment) 
Case b)
Journal  
Date  Particular  L.F.  Debit â‚¹  Credit â‚¹  
April 1  Goodwill A/c  Dr.  18,000  
To Aâ€™s Capital A/c (18,000Ã—3/6)  9,000  
To Bâ€™s Capital A/c (18,000Ã—2/6)  6,000  
To Câ€™s Capital A/c (18,000Ã—1/6)  3,000  
(Being goodwill raised in the books)  
Aâ€™s Capital A/c (18,000Ã—1/3)  Dr.  6,000  
Bâ€™s Capital A/c (18,000Ã—1/3)  Dr.  6,000  
Câ€™s Capital A/c (18,000Ã—1/3)  Dr.  6,000  
To Goodwill A/c  18,000  
(Being goodwill raised & written off) 
Working Note:
Old Ratio (A,B, and C) = 3 : 2 : 1
New Ratio (A,B, and C) = 1 : 1 : 1
Sacrificing or Gaining Ratio = Old Ratio âˆ’ New Ratio
Aâ€™s share = \(\frac{3}{6}\) – \(\frac{1}{3}\) = \(\frac{3}{6}\) – \(\frac{2}{6}\) = \(\frac{1}{6}\) (Sacrifice)
Bs share = \(\frac{2}{6}\) – \(\frac{1}{3}\) = \(\frac{2}{6}\) – \(\frac{2}{6}\) = 0
Câ€™s share = \(\frac{1}{6}\) – \(\frac{1}{3}\) = \(\frac{1}{6}\) – \(\frac{2}{6}\) = \(\frac{1}{6}\) (Gain)
Goodwill adjustment = â‚¹ 18,000
A receives = 18,000 X \(\frac{1}{6}\) = â‚¹3,000
C gains = 18,000 X \(\frac{1}{6}\) = â‚¹3,000
Question 6
X, Y and Z are partners sharing profits and losses in the ratio of 5 : 3 : 2. From 1st April, 2018, they decided to share profits and losses equally. The Partnership Deed provides that in the event of any change in the profitsharing ratio, the goodwill should be valued at two years’ purchase of the average profit of the preceding five years. The profits and losses of the preceding years ended 31st March, are:
Year  201314  201415  201516  201617  201718 
Profits (â‚¹)  70,000  85,000  45,000  35,000  10,000 (Loss) 
You are required to calculate goodwill and pass journal entry.
Solution:
Journal  
Date  Particulars  L.F.  Debit â‚¹  Credit â‚¹  
April 1  Yâ€™s Capital A/c  Dr.  3,000  
Zâ€™s Capital A/c  Dr.  12,000  
To Xâ€™s Capital A/c  15,000  
(Goodwill amount adjusted on change in profit sharing ratio) 
Working Notes 1: Sacrificing (or Gaining) Ratio
Old Ratio (X, Y and Z) = 5 : 3 : 2
New Ratio (X, Y and Z) = 1 : 1 : 1
Sacrificing (or Gaining) Ratio = Old Ratio âˆ’ New Ratio
Xâ€™s share = \(\frac{5}{10}\) – \(\frac{1}{3}\) = \(\frac{1510}{30}\) = \(\frac{5}{30}\) (Sacrifice)
Ys share = \(\frac{3}{10}\) – \(\frac{1}{3}\) = \(\frac{910}{30}\) – \(\frac{1}{30}\) (Gain)
Zâ€™s share = \(\frac{2}{10}\) – \(\frac{1}{3}\) = \(\frac{610}{30}\) – \(\frac{4}{30}\) (Gain)
Working Notes 2: Goodwill Evaluation
Goodwill = Average Profit X No. of Yearsâ€™ Purchased
Average Profit = \(\frac{70,000\, +\, 85,000\, +\, 45,000\, +,35,000\, \, 10,000}{5}\) = â‚¹ 45,000
No. of Yearsâ€™ Purchased = 2
So, Goodwill = â‚¹ 45,000 X 2 = â‚¹ 90,000
Working Notes 3: Goodwill Adjustment
Credited amount to Xâ€™s Capital A/c = 90,000 X \(\frac{5}{30}\) (Sacrifice) = â‚¹ 15,000
Credited amount to Yâ€™s Capital A/c = 90,000 X \(\frac{1}{30}\) (Gain) = â‚¹ 3,000
Credited amount to Zâ€™s Capital A/c = 90,000 X \(\frac{4}{30}\) (Gain) = â‚¹ 12,000
Question 7
Mandeep, Vinod and Abbas are partners sharing profits and losses in the ratio of 3 : 2 : 1. From 1st April, 2019 they decided to share profits equally. The Partnership Deed provides that in the event of any change in profitsharing ratio, goodwill shall be valued at three years’ purchase of the average profit of the last five years. The profits and losses of the past five years are:
Profit âˆ’ Year ended 31st March, 2015 âˆ’ â‚¹ 1,00,000; 2016 âˆ’ â‚¹ 1,50,000; 2018 âˆ’ â‚¹ 2,00,000; 2019 âˆ’ â‚¹ 2,00,000.
Loss âˆ’ Year ended 31st March, 2017 âˆ’ â‚¹ 50,000.
Pass the Journal entry showing the working.
Solution:
Journal  
Date  Particulars  L.F.  Debit â‚¹  Credit â‚¹  
April 1  Abbasâ€™s Capital A/c  Dr.  60,000  
To Mandeepâ€™s Capital A/c  60,000  
(Being adjustment made for a change in the ratio) 
Working Notes 1: Sacrifice or Gain Evaluation
Old Ratio (Mandeep, Vinod, and Abbas ) = 3 : 2 : 1
New Ratio (Mandeep, Vinod, and Abbas ) = 1 : 1 : 1
Sacrificing or Gaining Ratio = Old Ratio âˆ’ New Ratio
Mandeepâ€™s share = \(\frac{3}{6}\) – \(\frac{1}{3}\) = \(\frac{32}{6}\) = \(\frac{1}{6}\) (Sacrifice)
Vinodâ€™s share = \(\frac{2}{6}\) – \(\frac{1}{3}\) = \(\frac{22}{6}\) = 0
Abbasâ€™s share = \(\frac{1}{6}\) – \(\frac{1}{3}\) = \(\frac{12}{6}\) = \(\frac{1}{6}\) (Gain)
Working Notes 2: Goodwill Evaluation
Goodwill = Average Profit X No. of Yearsâ€™ Purchased
Average Profit = \(\frac{Total\, Profits\, of\, Past\, Years}{Number\, of\, Years}\)
Average Profit = \(\frac{1,00,000\, +\, 1,50,000\, +\, 2,00,000\, +,2,00,000\, \, 50,000}{5}\) = â‚¹ 1,20,000
No. of Yearsâ€™ Purchased = 3
So, Goodwill = â‚¹ 1,20,000 X 3 = â‚¹ 3,60,000
Working Notes 3: Goodwill Adjustment
Debited amount to Abbas’s Capital A/c = 3,60,000 X \(\frac{1}{6}\) (Gain) = â‚¹ 60,000
Credited amount to Mandeepâ€™s Capital A/c = 3,60,000 X \(\frac{1}{6}\) (Sacrifice)= â‚¹ 60,000
Question 8
X, Y and Z are partners sharing profits and losses in the ratio of 5 : 3 : 2, decided to share future profits and losses equally with effect from 1st April, 2019. On that date, the goodwill appeared in the books at â‚¹ 12,000. But it was revalued at â‚¹ 30,000. Pass Journal entries assuming that goodwill will not appear in the books of account.
Solution:
Journal  
Date  Particulars  L.F.  Debit â‚¹  Credit â‚¹  
April 1  Xâ€™s Capital A/c  Dr.  6,000  
Yâ€™s Capital A/c  Dr.  3,600  
Zâ€™s Capital A/c  Dr.  2,400  
To Goodwill A/c  12,000  
(Goodwill written off)  
April 1  Yâ€™s Capital A/c  Dr.  1,000  
Zâ€™s Capital A/c  Dr.  4,000  
To Xâ€™s Capital A/c  5,000  
(Goodwill adjusted on change in profit sharing ratio) 
Working Notes 1: Gain or Sacrificing Ratio Evaluation
Old Ratio (X, Y and Z) = 5 : 3 : 2
New Ratio (X, Y and Z) = 1 : 1 : 1
Sacrificing (or Gaining) Ratio = Old Ratio âˆ’ New Ratio
Xâ€™s share = \(\frac{5}{10}\) – \(\frac{1}{3}\) = \(\frac{1510}{30}\) = \(\frac{5}{30}\) (Sacrifice)
Ys share = \(\frac{3}{10}\) – \(\frac{1}{3}\) = \(\frac{910}{30}\) – \(\frac{1}{30}\) (Gain)
Zâ€™s share = \(\frac{2}{10}\) – \(\frac{1}{3}\) = \(\frac{610}{30}\) – \(\frac{4}{30}\) (Gain)
Working Notes 2: Old Goodwill Writtenoff Evaluation
Xâ€™s share = 12,000 x \(\frac{5}{10}\) = â‚¹ 60,000
Yâ€™s share = 12,000 x \(\frac{3}{10}\) = â‚¹ 3,600
Zâ€™s share = 12,000 x \(\frac{2}{10}\) = â‚¹ 2,400
Working Notes 3: Goodwill Adjustment
Credited amount to x’s Capital A/c = 30,000 X \(\frac{5}{30}\) (Sacrifice) = â‚¹ 5,000
Debited amount to Yâ€™s Capital A/c = 30,000 X \(\frac{1}{30}\) (Gain)= â‚¹ 1,000
Debited amount to Zâ€™s Capital A/c = 30,000 X \(\frac{4}{30}\) (Gain)= â‚¹ 4,000
Question 9
X, Y and Z are partners sharing profits and losses in the ratio of 5 : 3 : 2, decided to share future profits and losses equally with effect from 1st April, 2019. On that date, the goodwill appeared in the books at â‚¹ 12,000. But it was revalued at â‚¹ 30,000. Pass Journal entries assuming that goodwill will not appear in the books of account.
Solution:
Journal  
Date  Particulars  L.F.  Debit â‚¹  Credit â‚¹  
April 1  Aâ€™s Capital A/c  Dr.  6,000  
To Bâ€™s Capital A/c  6,000  
(Profit adjustment for 201819 on change in profit sharing ratio)  
April 1  Bâ€™s Capital A/c  Dr.  9,000  
To Aâ€™s Capital A/c  9,000  
(Goodwill Adjustment made on change in profit sharing ratio) 
Partnersâ€™ Capital Accounts  
Dr.  Cr.  
Particulars  A  B  Particulars  A  B 
B’s Capital A/c  6,000  â€“  Balance b/d  1,50,000  90,000 
(Profit Adjustment)  A’s Capital A/c  â€“  6,000  
A’s Capital A/c  â€“  9,000  (Profit Adjustment)  
(Goodwill Adjustment)  B’s Capital A/c  9,000  â€“  
Balance c/d  1,53,000  87,000  (Goodwill Adjustment)  
1,59,000  96,000  1,59,000  96,000 
Working Notes 1: Gain or Sacrificing Ratio Evaluation
Old Ratio (A and B) = 2 : 1
New Ratio (A and B) = 3 : 2
Sacrificing (or Gaining) Ratio = Old Ratio âˆ’ New Ratio
Aâ€™s share = \(\frac{2}{3}\) – \(\frac{3}{5}\) = \(\frac{109}{15}\) = \(\frac{1}{5}\) (Sacrifice)
Bâ€™s share = \(\frac{1}{3}\) – \(\frac{2}{5}\) = \(\frac{56}{15}\) – \(\frac{1}{15}\) (Gain)
Working Notes 2 : 201617 Profit Adjustment
Debited Profit to Aâ€™s Capital A/c = 90,000 X \(\frac{3}{5}\) (Sacrifice) = â‚¹ 6,000
Credited Profit to Bâ€™s Capital A/c = 90,000 X \(\frac{3}{5}\) (Sacrifice) = â‚¹ 6,000
Working Notes 3 : New Goodwill Evaluation
Goodwill = 201415 Profit + 201516 Profit
= 60,000 + 75,000 = â‚¹ 1,35,000
Working Notes 4 : Goodwill Adjustment Evaluation
Goodwill debited to Aâ€™s Capital A/c = 1,35,000 X \(\frac{1}{15}\) (Sacrifice) = â‚¹ 9,000
Goodwill credited to Aâ€™s Capital A/c = 1,35,000 X \(\frac{1}{15}\) (Gain) = â‚¹ 9,000
Question 10
Jai and Raj are partners sharing profits in the ratio of 3 : 2. With effect from 1st April, 2019, they decided to share profits equally. Goodwill appeared in the books at â‚¹ 25,000. As on 1st April, 2019, it was valued at â‚¹ 1,00,000. They decided to carry goodwill in the books of the firm.
Pass the Journal entry giving effect to the above.
Solution:
Journal  
Date  Particulars  L.F.  Debit â‚¹  Credit â‚¹  
1st April  Rajâ€™s Capital A/c  Dr.  7,500  
To Jaiâ€™s Capital A/c  7,500  
(Goodwill adjustment) 
Working Notes 1: Gain or Sacrificing Ratio Evaluation
Sacrificing (or Gaining) Ratio = Old Ratio âˆ’ New Ratio
Jaiâ€™s share = \(\frac{3}{5}\) – \(\frac{1}{2}\) = \(\frac{1}{10}\) (Sacrifice)
Rajâ€™s share = \(\frac{2}{5}\) – \(\frac{1}{2}\) = \(\frac{1}{10}\) (Gain)
Working Notes 1: Adjusted Goodwill Evaluation
Adjusted Goodwill = 1,00,000 – 25,000 = 75,000
Goodwill credited to Jaiâ€™s Capital A/c = 75,000 X \(\frac{1}{10}\) (Sacrifice) = â‚¹ 7,500
Goodwill debited to Rajâ€™s Capital A/c = 75,000 X \(\frac{1}{10}\) (Sacrifice) = â‚¹ 7,500
Question 11
X and Y are partners in a firm sharing profits and losses in the ratio of 3 : 2. With effect from 1st April, 2019, they decided to share future profits equally. On the date of change in the profitsharing ratio, the Profit and Loss Account showed a credit balance of â‚¹ 1,50,000. Record the necessary Journal entry for the distribution of the balance in the Profit and Loss Account immediately before the change in the profitsharing ratio.
Solution:
Journal  
Date

Particulars  L.F.  Debit â‚¹  Credit â‚¹  
1st April  Profit & Loss A/c  Dr.  1,50,000  
To Xâ€™s Capital A/c  90,000  
To Yâ€™s Capital A/c  60,000  
(Balance adjusted in P&L A/c in old ratio) 
Working Notes: Profit & Loss Evaluation
Xâ€™s Share = 1,50,000 X \(\frac{3}{5}\) (Sacrifice) = â‚¹ 90,000
Yâ€™s Share = 1,50,000 X \(\frac{2}{5}\) (Sacrifice) = â‚¹ 60,000
Question 12
X and Y are partners in a firm sharing profits and losses in the ratio of 3 : 2. With effect from 1st April, 2019, they decided to share future profits equally. On the date of change in the profitsharing ratio, the Profit and Loss Account showed a credit balance of â‚¹ 1,50,000. Record the necessary Journal entry for the distribution of the balance in the Profit and Loss Account immediately before the change in the profitsharing ratio.
Solution:
Journal  
Date  Particulars  L.F.  Debit â‚¹  Credit â‚¹  
1st April  Aâ€™s Capital A/c  Dr.  80,000  
Bâ€™s Capital A/c  Dr.  20,000  
To Profit & Loss A/c  1,00,000  
(Profit & Loss share) 
Question 13
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, 2019. 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 (â‚¹)  
General Reserve  6,000 
Profit and Loss A/c (Credit)  24,000 
Advertisement Suspense A/c  12,000 
Pass an Adjustment Entry.
Solution:
Journal  
Date  Particulars  L.F.  Debit â‚¹  Credit â‚¹  
April 1  Zâ€™s Capital A/c  Dr.  5,400  
To Xâ€™s Capital A/c  5,400  
(Being adjustment for General Reserve, Profit and Loss A/c, and Advertisement Suspense A/c made on change in profit sharing ratio) 
Working Notes 1:
Adjustments to be made on Net amount = General Reserve + Profit and Loss A/c( Credit) – Advertisement Suspense A/c
Adjustments to be made on Net amount = 6,000 + 24,000 – 12,000 = â‚¹ 18,000
Working Notes 2: Gain or Sacrificing Ratio Evaluation
Old Ratio (X, Y and Z) = 5 : 3 : 2
New Ratio (X, Y and Z) = 2 : 3 : 5
Sacrificing (or Gaining) Ratio = Old Ratio âˆ’ New Ratio
Xâ€™s share = \(\frac{5}{10}\) – \(\frac{2}{10}\) = \(\frac{3}{10}\) (Sacrifice)
Yâ€™s share = \(\frac{3}{10}\) – \(\frac{3}{10}\) = 0
Zâ€™s share = \(\frac{2}{10}\) – \(\frac{5}{10}\) = \(\frac{3}{10}\) (Gain)
Credited amount to Xâ€™s Capital A/c = 18,000 X \(\frac{3}{10}\) (Sacrifice) = â‚¹ 5,400
Debited amount to Zâ€™s Capital A/c = 18,000 X \(\frac{3}{10}\) (Sacrifice) = â‚¹ 5,400
Question 14
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 ‘Workmen Compensation Reserve’ of â‚¹ 1,20,000 at the time of change in profitsharing ratio, when:
(i) no information is given; (ii) there is no claim against it.
Solution:
Journal for case (i) & (ii)  
Date  Particulars  L.F.  Debit â‚¹  Credit â‚¹  
Workmen Compensation Reserve A/c  Dr.  1,20,000  
To Aâ€™s Capital A/c  60,000  
To Bâ€™s Capital A/c  36,000  
To Câ€™s Capital A/c  24,000  
(Distributed Workmen Compensation Reserve) 
Note:
In both cases, the distribution for workmen compensation reserve will be in old ratio 5:3:2.
Question 15
X, Y and Z 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 ‘Workmen Compensation Reserve’ of â‚¹ 1,20,000 at the time of change in profitsharing ratio, when there is a claim of â‚¹ 80,000 against it.
Solution:
Journal  
Date  Particulars  L.F.  Debit â‚¹  Credit â‚¹  
Workmen Compensation Reserve A/c  Dr.  1,20,000  
To Xâ€™s Capital A/c  20,000  
To Yâ€™s Capital A/c  12,000  
To Zâ€™s Capital A/c  8,000  
To Workmen Compensation Claim A/c
(Balance adjustment in workmen compensation reserve A/c in old ratio) 
80,000 
Working Notes: Workmen Compensation Reserve Evaluation
Credited amount to Xâ€™s Capital A/c = 40,000 X \(\frac{5}{10}\) (Sacrifice) = â‚¹ 20,000
Credited amount to Xâ€™s Capital A/c = 40,000 X \(\frac{3}{10}\) (Sacrifice) = â‚¹ 12,000
Debited amount to Zâ€™s Capital A/c = 40,000 X \(\frac{2}{10}\) (Sacrifice) = â‚¹ 8,000
Question 16
X, Y and Z 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, 2019. Workmen Compensation Reserve appears at â‚¹ 1,20,000 in the Balance Sheet as of 31st March, 2019 and Workmen Compensation Claim is estimated at â‚¹ 1,50,000. Pass Journal entries for the accounting treatment of Workmen Compensation Reserve.
Solution:
Journal  
Date  Particulars  L.F.  Debit â‚¹  Credit â‚¹  
April 1  
Workmen Compensation Reserve A/c  Dr.  1,20,000  
Revaluation A/c  Dr.  30,000  
To Provision for Workmen Compensation Claim A/c
(Being provision created and shortfall charged to Revaluation A/c) 
1,50,000  
Xâ€™s Capital A/c  Dr.  15,000  
Yâ€™s Capital A/c  Dr.  9,000  
Zâ€™s Capital A/c  Dr.  6,000  
To Revaluation A/c  30,000  
(Being revaluation loss transferred to Partnersâ€™ 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 â‚¹ 20,000 at the time of change in profitsharing ratio, when investment (market value â‚¹ 95,000) appears in the books at â‚¹ 1,00,000.
Solution:
Journal  
Date  Particulars  L.F.  Debit â‚¹  Credit â‚¹  
Investment Fluctuation Reserve A/c  Dr.  5,000  
To Investments A/c  5,000  
(Adjustment for investment value decrease)  
Investment Fluctuation Reserve A/c  Dr.  15,000  
To Aâ€™s Capital A/c  7,500  
To Bâ€™s Capital A/c  4,500  
To Câ€™s Capital A/c  3,000  
(Balance adjustment in Investment Fluctuation Reserve A/c in old ratio) 
Working Notes: Investment Fluctuation Reserve Evaluation
Credited amount to Xâ€™s Capital A/c = 15,000 X \(\frac{5}{10}\) (Sacrifice) = â‚¹ 7,500
Credited amount to Xâ€™s Capital A/c = 15,000 X \(\frac{3}{10}\) (Sacrifice) = â‚¹ 4,500
Credited amount to Zâ€™s Capital A/c = 15,000 X \(\frac{2}{10}\) (Sacrifice) = â‚¹ 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, 2019. The extract of their Balance Sheet as at 31st March, 2019 is as follows:
Liabilities  â‚¹  Assets  â‚¹ 
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 â‚¹ 4,00,000;
(iii) When its Market Value is â‚¹ 4,24,000;
(iv) When its Market Value is â‚¹ 3,70,000;
(v) When its Market Value is â‚¹ 3,10,000.
Solution:
Journal  
Date  Particulars  L.F.  Debit â‚¹  Credi â‚¹  
(i)  Investment Fluctuation Reserve A/c  Dr.  60,000  
To Nitinâ€™s Capital A/c  20,000  
To Tarunâ€™s Capital A/c  20,000  
To Amarâ€™s Capital A/c
(Being distribution of Investment Fluctuation Reserve) 
20,000  
(ii)  Investment Fluctuation Reserve A/c  Dr.  60,000  
To Nitinâ€™s Capital A/c  20,000  
To Tarunâ€™s Capital A/c  20,000  
To Amarâ€™s Capital A/c
(Being distribution of Investment Fluctuation Reserve) 
20,000  
(iii)  Investment Fluctuation Reserve A/c  Dr.  60,000  
To Nitinâ€™s Capital A/c  20,000  
To Tarunâ€™s Capital A/c  20,000  
To Amarâ€™s Capital A/c  20,000  
(Investment Fluctuation Reserve distributed)  
Investments A/c  Dr.  24,000  
To Revaluation A/c  24,000  
(Investments revalued)  
Revaluation A/c  Dr.  24,000  
To Nitinâ€™s Capital A/c  8,000  
To Tarunâ€™s Capital A/c  8,000  
To Amarâ€™s Capital A/c  8,000  
(Revaluation profit transferred to Partnersâ€™ Capital A/c)  
(iv)  Investment Fluctuation Reserve A/c  Dr.  60,000  
To Investment A/c  30,000  
To Nitinâ€™s Capital A/c  10,000  
To Tarunâ€™s Capital A/c  10,000  
10,000  
(Investment Fluctuation Reserve distributed)  
(v)  Investment Fluctuation Reserve A/c  Dr.  60,000  
Revaluation A/c  Dr.  30,000  
To Investment A/c
(Decrease in investments set off against IFR and balance debited to Revaluation A/c) 
90,000  
Nitinâ€™s Capital A/c  Dr.  10,000  
Tarunâ€™s Capital A/c  Dr.  10,000  
Amarâ€™s Capital A/c  Dr.  10,000  
To Revaluation A/c  30,000  
(Loss on revaluation transferred to Partnersâ€™ Capital A/c) 
Question 19
X and Y are partners sharing profits in the ratio of 2 : 1. On 31st March, 2019, their Balance Sheet showed General Reserve of â‚¹ 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.
Solution:
(i) If they do not want to show General Reserve in the new Balance Sheet
Journal  
Date  Particulars  L.F.  Debit â‚¹  Credit â‚¹  
April 1  General Reserve A/c  Dr.  60,000  
To Xâ€™s Capital A/c  40,000  
To Yâ€™s Capital A/c  20,000  
(Being balance adjustment in General Reserve A/c in old ratio) 
Working Notes: General Reserve A/c Evaluation
Share of X = 60,000 X \(\frac{2}{3}\) (Sacrifice) = â‚¹ 40,000
Share of Y = 60,000 X \(\frac{1}{3}\) (Sacrifice) = â‚¹ 20,000
(ii) If they want to show General Reserve in the new Balance Sheet
Journal  
Date  Particulars  L.F.  Debit â‚¹  Credit â‚¹  
April 1  Yâ€™s Capital A/c  Dr.  4,000  
To Xâ€™s Capital A/c  4,000  
(Being balance adjustment in General Reserve A/c in sacrificing/gaining ratio) 
Working Notes 1 : General Reserve A/c in Sacrificing/Gaining Ratio Evaluation
Sacrificing Ratio = Old Ratio – New Ratio
Xâ€™s share = \(\frac{2}{3}\) – \(\frac{3}{5}\) = \(\frac{1}{15}\) (Sacrifice)
Yâ€™s share = \(\frac{1}{3}\) – \(\frac{2}{5}\) = – \(\frac{1}{15}\) (Gain)
Working Notes 2 : Compensation by Y to X Evaluation
Amount to be compensated = 60,000 X \(\frac{1}{15}\) = â‚¹ 4,000
Question 20
Bhavya and Sakshi are partners in a firm, sharing profits and losses in the ratio of 3 : 2. On 31st March, 2018 their Balance Sheet was as under:
Liabilities  â‚¹  Assets  â‚¹  
Sundry Creditors  13,800  Furniture  16,000  
General Reserve  23,400  Land and Building  56,000  
Investment Fluctuation Fund  20,000  Investments  30,000  
Bhavya’s Capital  50,000  Trade Receivables  18,500  
Sakshi’s Capital  40,000  Cash in Hand  26,700  
1,47,200  1,47,200 
The partners have decided to change their profit sharing ratio to 1 : 1 with immediate effect. For the purpose, they decided that:
(i) Investments to be valued at â‚¹ 20,000.
(ii) Goodwill of the firm is valued at â‚¹ 24,000.
(iii) General Reserve not to be distributed between the partners.
You are required to pass necessary Journal entries in the books of the firm. Show workings.
Solution:
Bhavya and Sakshi Journal  
Date  Particulars  L.F.  Debit â‚¹  Credit â‚¹  
31 March  Investment Fluctuation Fund A/c  Dr.  20,000  
To Investments A/c  10,000  
To Bhavyaâ€™s Capital A/c  6,000  
To Sakshiâ€™s Capital A/c  4,000  
(Being adjustment in the market value of investment and distributed excess amount)  
31 March  Sakshiâ€™s Capital A/c (24,000Ã—1/10)  Dr.  2,400  
To Bhavyaâ€™s Capital A/c (24,000Ã—1/10)  2,400  
(Being goodwill adjustment after profitsharing ratio change)  
31 March  Sakshiâ€™s Capital A/c (23,400Ã—1/10)  Dr.  2,340  
To Bhavyaâ€™s Capital A/c (23,400Ã—1/10)  2,340  
(Being general reserve adjustment not distributed) 
Working Notes:
Particulars  Bhavya  Sakshi 
Old Ratio  3/5  2/5 
New Ratio  1/2  1/2 
Gain/Sacrifice  (3/5 â€“ 1/2)= 1/10 (Sacrifice)  (2/5 â€“ 1/2)= (1/10) (Gain) 
Question 21
X, Y and Z share profits as 5 : 3 : 2. They decide to share their future profits as 4 : 3 : 3 with effect from 1st April, 2019. On this date the following revaluations have taken place:
Book Values â‚¹  Revised Values â‚¹  
Investments  22,000  25,000 
Plant and Machinery  25,000  20,000 
Land and Building  40,000  50,000 
Outstanding Expenses  5,600  6,000 
Sundry Debtors  60,000  50,000 
Trade Creditors  70,000  60,000 
Pass necessary adjustment entry to be made because of the above changes in the values of assets and liabilities. However, old values will continue in the books .
Solution:
Journal  
Date  Particulars  L.F.  Debit â‚¹  Credit â‚¹  
April 1  Zâ€™s Capital A/c  Dr.  760  
To Xâ€™s Capital A/c  760  
(Adjustment of revaluation profit made) 
Working Notes 1: Net Profit or Loss Revaluation Evaluation
Particulars  Amount â‚¹ 
Increase in Investment  3,000 (Cr.) 
Decrease in Plant and Machinery  (5,000) (Dr.) 
Increase in Land and Building  10,000 (Cr.) 
Increase in Outstanding Expenses  (400) (Dr.) 
Decrease in Sundry Debtors  (10,000) (Dr.) 
Decrease in Trade Creditors  10,000 (Cr.) 
Profit on Revaluation  7,600 (Cr.) 
Working Notes 2: Sacrificing or Gaining Ratio
Old Ratio (X,Y, and Z) = 5:3:2
New Ratio (X,Y, and Z) = 4:3:3
Sacrificing or Gaining Ratio = Old Ratio – New Ratio
Xâ€™s share = \(\frac{5}{10}\) – \(\frac{4}{10}\) = \(\frac{1}{10}\) (Sacrifice)
Yâ€™s share = \(\frac{3}{10}\) – \(\frac{3}{10}\) = 0
Zâ€™s share = \(\frac{2}{10}\) – \(\frac{3}{10}\) = \(\frac{1}{10}\) (Gain)
Working Notes 3: Revaluation Profit Evaluation
Credited amount to X = 7,600 X \(\frac{1}{10}\) = â‚¹ 760
Credited amount to X = 7,600 X \(\frac{1}{10}\) = â‚¹ 760
Question 22
Ashish, Aakash and Amit are partners sharing profits and losses equally. The Balance Sheet as at 31st March, 2019 was as follows:
Liabilities  â‚¹  Assets  â‚¹  
Sundry Creditors  75,000  Cash in Hand  24,000  
General Reserve  90,000  Cash at Bank  1,40,000  
Capital A/cs:  Sundry Debtors  80,000  
Ashish  3,00,000  Stock  1,40,000  
Aakash  3,00,000  Land and Building  4,00,000  
Amit  2,75,000  8,75,000  Machinery  2,50,000 
Advertisement Suspense  6,000  
10,40,000  10,40,000 
â€‹The partners decided to share profits in the ratio of 2 : 2 : 1 w.e.f. 1st April, 2019. They also decided that:
(i) Value of stock to be reduced to â‚¹ 1,25,000.
(ii) Value of machinery to be decreased by 10%.
(iii) Land and Building to be appreciated by â‚¹ 62,000.
(iv) Provision for Doubtful Debts to be made @ 5% on Sundry Debtors.
(v) Aakash was to carry out the reconstitution of the firm at a remuneration of â‚¹ 10,000.
Pass necessary Journal entries to give effect to the above.
Solution:
Journal  
Date  Particulars  L.F.  Debit â‚¹  Credit â‚¹  
April 1  General Reserve A/c  Dr.  90,000  
To Ashishâ€™s Capital A/c  30,000  
To Akashâ€™s Capital A/c  30,000  
To Amitâ€™s Capital A/c  30,000  
(Distributed Reserve)  
April 1  Ashishâ€™s Capital A/c  Dr.  2,000  
Akashâ€™s Capital A/c  Dr.  2,000  
Amitâ€™s Capital A/c  Dr.  2,000  
To Advertisement Suspense A/c
(Distributed Advertisement Suspense) 
6,000  
April 1  Revaluation A/c  Dr.  54,000  
To Stock A/c  15,000  
To Machinery A/c  25,000  
To Provision for Doubtful Debts A/c  4,000  
To Akashâ€™s Capital A/c (Remuneration)
(Revalued Assets) 
10,000  
April 1  Land & Building A/c  Dr.  62,000  
To Revaluation A/c  62,000  
(Revalued Assets)  
April 1  Revaluation A/c  Dr.  8,000  
To Ashishâ€™s Capital A/c  2,666  
To Akashâ€™s Capital A/c  2,666  
To Amitâ€™s Capital A/c  2,667  
(Profit made) 
Question 23
A, B and C are partners sharing profits and losses in the ratio of 5 : 3 : 2. Their Balance Sheet as at 31st March, 2019 stood as follows:
Liabilities  Amount â‚¹  Assets  Amount â‚¹  
Capital A/cs:  Land and Building  3,50,000  
A  2,50,000  Machinery  2,40,000  
B  2,50,000  Computers  70,000  
C  2,00,000  7,00,000  Investments  1,00,000 
General Reserve  60,000  Sundry Debtors  50,000  
Investments Fluctuation Reserve  30,000  Cash in Hand  10,000  
Sundry Creditors  90,000  Cash at Bank  55,000  
Advertisement Suspense  5,000  
8,80,000  8,80,000 
They decided to share profits equally w.e.f. 1st April, 2019. They also agreed that:
(i) Value of Land and Building be decreased by 5%.
(ii) Value of Machinery has increased by 5%.
(iii) A Provision for Doubtful Debts be created @ 5% on Sundry Debtors.
(iv) A Motorcycle valued at â‚¹ 20,000 was unrecorded and is now to be recorded in the books.
(v) Out of Sundry Creditors, â‚¹ 10,000 is not payable.
(vi) Goodwill is to be valued at 2 years’ purchase of last 3 years profits. Profits being for 201819 âˆ’ â‚¹ 50,000 (Loss); 201718 âˆ’ â‚¹ 2,50,000 and 201617 âˆ’ â‚¹ 2,50,000.
(vii) C was to carry out the work for reconstituting the firm at a remuneration (including expenses) of â‚¹ 5,000. Expenses came to â‚¹ 3,000.
Pass Journal entries and prepare Revaluation Account.
Solution:
Journal  
Date  Particulars  L.F.  Debit â‚¹  Credit â‚¹  
April 1  General Reserve A/c  Dr.  60,000  
To Aâ€™s Capital A/c  30,000  
To Bâ€™s Capital A/c  18,000  
To Câ€™s Capital A/c  12,000  
(Distributed Reserve)  
Aâ€™s Capital A/c  Dr  2,500  
Bâ€™s Capital A/c  Dr.  1,500  
Câ€™s Capital A/c  Dr.  1,000  
To Advertisement Suspense A/c  5,000  
(Distributed Advertisement Suspense)  
Investment Fluctuation Reserve A/c  Dr.  30,000  
To Investment A/c  10,000  
To Aâ€™s Capital A/c  10,000  
To Bâ€™s Capital A/c  6,000  
To Câ€™s Capital A/c  4,000  
(Distributed Investment Fluctuation Reserve)  
Machinery A/c  Dr.  12,000  
Motorcycle A/c  Dr.  20,000  
Creditors A/c  Dr.  10,000  
To Revaluation A/c
(Revalued Assets) 
42,000  
Revaluation A/c  25,000  
To Land & Building A/c  17,500  
To Provision for Doubtful Debts A/c  2,500  
To Bank A/c (Remuneration)
(Revalued Assets) 
5,000  
Revaluation A/c  17,000  
To Aâ€™s Capital A/c  8,500  
To Bâ€™s Capital A/c  5,100  
To C â€™s Capital A/c  3,400  
(Being Profit on revaluation transferred to Partnersâ€™ Capital A/c)  
Bâ€™s Capital A/c  Dr.  10,000  
C â€™s Capital A/c  Dr.  40,000  
To Aâ€™s Capital A/c
(Adjusted Goodwill) 
Revaluation A/c  
Dr.  Cr.  
Particulars  Amount
(â‚¹) 
Particulars  Amount
(â‚¹) 

Land & Building A/c  17,500  Machinery A/c  12,000  
Provision for Doubtful Debts A/c  2,500  Motorcycle A/c  20,000  
Bank A/c (Remuneration)  5,000  Creditors A/c  10,000  
Profit transferred to:  
A  8,500  
B  5,100  
C  3,400  17,000  
42,000  42,000 
Working Note 1: Sacrificing or Gaining Ratio
Old Ratio (A:B:C) = 5:3:2
New Ratio (A:B:C) = 1:1:1
Sacrificing or Gaining Ratio = Old Ratio – New Ratio
Aâ€™s share = \(\frac{5}{10}\) – \(\frac{1}{3}\) = \(\frac{1510}{30}\) = \(\frac{5}{30}\) (Sacrifice)
Bâ€™s share = \(\frac{3}{10}\) – \(\frac{1}{3}\) = \(\frac{910}{30}\) = \(\frac{1}{30}\) (Gain)
Câ€™s share = \(\frac{2}{10}\) – \(\frac{1}{3}\) = \(\frac{610}{30}\) = \(\frac{4}{30}\) (Gain)
Working Notes 2: Goodwill Evaluation
Goodwill = Average Profit X No. of Years Purchased
= 1,50,000 X 3 = 3,00,000
Working Notes 3: Goodwill Adjustment Evaluation
Credited amount to A = 3,00,000 X \(\frac{5}{30}\) = â‚¹ 50,000
Debited amount to B = 3,00,000 X \(\frac{1}{30}\) = â‚¹ 10,000
Debited amount to C = 3,00,000 X \(\frac{4}{30}\) = â‚¹ 40,000
Question 24
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, 2019 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:
â€‹
Book values (â‚¹)  Revised values (â‚¹)  
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.
Solution:
Journal  
Date  Particulars  L.F.  Debit â‚¹  Credit â‚¹  
2019  
April 1  Aâ€™s Capital A/c
(30,000X \(\frac{1}{10}\) = 3,000 
Dr.  3,000  
To Bâ€™s Capital A/c  3,000  
(Being entry adjustment for change in ratio)  
Working Note 1: Sacrificing or Gaining Ratio
Old Ratio (A:B:C) = 2:2:1
New Ratio (A:B:C) = 5:3:2
Sacrificing or Gaining Ratio = Old Ratio – New Ratio
Aâ€™s share = \(\frac{2}{5}\) – \(\frac{5}{10}\) = – \(\frac{45}{10}\) = \(\frac{1}{10}\) (Gain)
Bâ€™s share = \(\frac{2}{5}\) – \(\frac{3}{10}\) = \(\frac{43}{10}\) = \(\frac{1}{10}\) (Sacrifice)
Câ€™s share = \(\frac{1}{5}\) – \(\frac{2}{10}\) = \(\frac{22}{10}\) = 0
Question 25
â€‹X, Y and Z are partners sharing profits and losses in the ratio of 7 : 5 : 4. Their Balance Sheet as at 31st March, 2019 stood as:
Liabilities  â‚¹  Assets  â‚¹  
Capital A/cs:  Sundry Assets  7,00,000  
X  2,10,000  
Y  1,50,000  
Z  1,20,000  4,80,000  
General Reserve  65,000  
Profit and Loss A/c  25,000  
Creditors  1,30,000  
7,00,000  7,00,000 
Partners decided that with effect from 1st April, 2019, they will share profits and losses in the ratio of 3 : 2 : 1. For this purpose, the goodwill of the firm was valued at â‚¹ 1,50,000. The partners neither want to record the goodwill nor want to distribute the General Reserve and profits.
Pass a Journal entry to record the change and prepare Balance Sheet of the constituted firm.
Solution:
Journal  
Date  Particulars  L.F.  Debit
Amount (â‚¹) 
Credit
Amount (â‚¹) 

April 1  Xâ€™s Capital A/c  Dr.  15,000  
Yâ€™s Capital A/c  Dr.  5,000  
To Zâ€™s Capital A/c  20,000  
(Goodwill, General Reserve and Profit and Loss Account Adjustment made on change in profit sharing ratio)  
Balance Sheet as on April 1st, 2019  
Liabilities  â‚¹  Assets  â‚¹  
Capital A/c s:  Sunday Assets  7,00,000  
X  1,95,000  
Y  1,45,000  
Z  1,40,000  4,80,000  
General Reserve  65,000  
Profit and Loss A/c  25,000  
Creditors  1,30,000  
7,00,000  7,00,000  
Working Note 1: Sacrificing or Gaining Ratio
Old Ratio (X:Y:Z) = 7:5:4
New Ratio (X:Y:Z) = 3:2:1
Sacrificing or Gaining Ratio = Old Ratio – New Ratio
Xâ€™s share = \(\frac{7}{16}\) – \(\frac{3}{6}\) = – \(\frac{2124}{48}\) = \(\frac{3}{48}\) (Gain)
Yâ€™s share = \(\frac{5}{16}\) – \(\frac{2}{6}\) = \(\frac{1516}{48}\) = \(\frac{1}{48}\) (Gain)
Zâ€™s share = \(\frac{4}{16}\) – \(\frac{1}{16}\) = \(\frac{128}{48}\) = \(\frac{4}{48}\) (Sacrifice)
Working Note 2: Reserve , Profit & Loss, Goodwill Adjustment
Total amount adjusted = Reserve + Profit & Loss + Goodwill Adjustment
= 65,000 + 25,000 + 1,50,000 = â‚¹ 2,40,000
Debited amount to Xâ€™s Capital = 2,40,000 X \(\frac{3}{48}\) = â‚¹ 15,000
Debited amount to Yâ€™s Capital = 2,40,000 X \(\frac{1}{48}\) = â‚¹ 5,000
Credited amount to Zâ€™s Capital = 2,40,000 X \(\frac{4}{48}\) = â‚¹ 20,000
Working Note 3:
Partnersâ€™ Capital Accounts  
Dr.  Cr.  
Particulars  X  Y  Z  Particulars  X  Y  Z 
Z’s Capital A/c  15,000  5,000  â€“  Balance b/d  2,10,000  1,50,000  1,20,000 
X’s Capital A/c  â€“  â€“  15,000  
Y’s Capital A/c  â€“  â€“  5,000  
Balance c/d  1,95,000  1,45,000  1,40,000  
2,10,000  1,50,000  1,40,000  2,10,000  1,50,000  1,40,000 
Important Topics in Accountancy: 
Solution are very easy to use to understand thank you sir