Question

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, 2018. The extract of their Balance Sheet as at 31st March, 2018 is as follows:

Liabilities	₹	Assets	₹
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 given as ₹ 4,00,000;
(iii) When its Market Value is given as ₹ 4,24,000;
(iv) When its Market Value is given as ₹ 3,70,000;
(v) When its Market Value is given as ₹ 3,10,000.

Answer 1

Journal
Date 01.04.2018	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
(i)	Investment Fluctuation Reserve A/c	Dr.		60,000
	To Nitin’s Capital A/c				20,000
	To Tarun’s Capital A/c				20,000
	To Amar’s Capital A/c				20,000
	(Investment Fluctuation Reserve distributed)
(ii)	Investment Fluctuation Reserve A/c	Dr.		60,000
	To Nitin’s Capital A/c				20,000
	To Tarun’s Capital A/c				20,000
	To Amar’s Capital A/c				20,000
	(Investment Fluctuation Reserve distributed)
(iii)	Investment Fluctuation Reserve A/c	Dr.		60,000
	To Nitin’s Capital A/c				20,000
	To Tarun’s Capital A/c				20,000
	To Amar’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 Nitin’s Capital A/c				8,000
	To Tarun’s Capital A/c				8,000
	To Amar’s Capital A/c				8,000
	(Revaluation profit transferred to Partners’ Capital A/c)
(iv)	Investment Fluctuation Reserve A/c	Dr.		60,000
	To Investment A/c				30,000
	To Nitin’s Capital A/c				10,000
	To Tarun’s Capital A/c				10,000
	To Amar’s Capital A/c				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				90,000
	(Decrease in investments set off against IFR and balance debited to Revaluation A/c)
	Nitin’s Capital A/c	Dr.		10,000
	Tarun’s Capital A/c	Dr.		10,000
	Amar’s Capital A/c	Dr.		10,000
	To Revaluation A/c				30,000
	(Loss on revaluation transferred to Partners’ Capital A/c)