Ramesh wants to retire from the firm. The gain (profit) on revaluation on that date was $R s . 12, 000$ . Mohan and Rahul want to share this in their new profit-sharing ratio of $3 : 2$ . Ramesh wants this to be shared equally. How is the profit to be shared? Given reasons.

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Solution

Revaluation of assets and liabilities is made at the time of Ramesh’s retirement and not after his retirement. Therefore, profits on revaluation will be distributed among all the partners in their old profit sharing ratio. In the absence of partnership deed, profits are distributed among all the partners in equal ratio.

Therefore, profit share of each partner = 12,000 X 1/3 = Rs. 4,000

Particulars

L.F.

Debit Rs.

Credit Rs.

Revaluation A/c Dr.

12,000

To Ramesh’s Capital A/c

4,000

To Mohan’s Capital A/c

4,000

To Rahul’s Capital A/c

4,000

(Being revaluation profit distributed among all the partners in their old ratio)

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Particulars	L.F.	Debit Rs.	Credit Rs.
Revaluation A/c Dr.		12,000
To Ramesh’s Capital A/c			4,000
To Mohan’s Capital A/c			4,000
To Rahul’s Capital A/c			4,000
(Being revaluation profit distributed among all the partners in their old ratio)

Ramesh wants to retire from the firm. The gain (profit) on revaluation on that date was Rs.12,000. Mohan and Rahul want to share this in their new profit-sharing ratio of 3:2. Ramesh wants this to be shared equally. How is the profit to be shared? Given reasons.

Ramesh wants to retire from the firm. The gain (profit) on revaluation on that date was $R s . 12, 000$ . Mohan and Rahul want to share this in their new profit-sharing ratio of $3 : 2$ . Ramesh wants this to be shared equally. How is the profit to be shared? Given reasons.