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Leela and Meeta were partners in a firm sharing profits and losses in the ratio of 5:3. On 1st April, 2014 they admitted Om as a new partner. On the date of Om's admission the balance sheet of Leela and Meeta showed a balance of Rs 1,60,000 in General reserve and Rs 2,40,000 (Cr) in Profit and Loss Account. Record necessary journal entries for the treatment of these items on Om's admission. The new profit sharing ratio between Leela, Meeta and Om was 5:3:2.

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Solution

Books of Leela, Meeta and Om

JOURNAL

DateParticularsL.F.Dr.(Rs)Cr.(Rs)2014April 1General Reserve A/c Dr.1,60,000 To Leela's Capital A/c1,00,000 To Meeta's Capital A/c60,000(The transfer of the balance of general reserve to oldPartner's capital accounts in old ratio on the admissionof Om) –––––––––––––––––––––––––––––––––––––––––––––––––––––––April 1Profit & Loss A/c Dr.2,40,000 To Leela's Capital A/c1,50,000 To Meeta's Capital A/c90,000(The transfer of the balnace of accumulated profits to old partner's capital accounts inold ratio on the admission of Om)


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