Question

A and B are partners sharing profits and losses in the ratio of 2:1. From April 1, 2017, they decided to share the profits in the ratio of 3:2. On that date, profit and loss account showed a debit balance or Rs 60,000. Record the necessary journal entry for the distribution of the balance in the Profit and Loss Account.

Answer 1

JOURNAL

$\begin{array}{ccccc}\text{Date}& \text{Particulars}& \text{L.F.}& \text{Dr.(Rs)}& \text{Cr.(Rs)}\\ 2017& & & & \\ \text{April 1}& \text{A's Capital A/c(2/3)}Dr.& & 40,000& \\ & \text{B's Capital A/c (1/3)}Dr.& & 20,000& \\ & \text{To Profit and Loss A/c}& & & 60,000\\ & \text{(Transfer of undistributed loss on change in profit}& & & \\ & \text{sharing ratio)}& & & \end{array}$