Question

$A,B$ and $C$ were partners sharing profits and losses in the ratio of $6:3:1$. They decide to take $D$ into partnership with effect from $1^{st}$April,2018. The new profit-sharing ratio between $A,B,C$ and $D$ will be $3:3:3:1$. They also decided to record the effect of the following without affecting their book values, by passing a single adjustment entry:

	Book Value (Rs.)
General Reserve	1,50,000
Contingency Reserve	60,000
Profit and Loss A/c(Cr.)	90,000
Advertisement Suspense A/c (Dr.)	1,20,000

Pass the necessary single adjustment entry, through the partner's Current Account.

Answer 1

JOURNAL

1. General reserve a/c..... Dr. 150000

Contingency reserve a/c.... Dr. 60000

Profit and loss a/c... Dr. 90000

To Advertisement suspense a/c 120000

To A's Current a/c 108000

To B's Current a/c 54000

To C's Current a/c 18000

(Being adjustment of accumulated reserves through the partner's current accounts)