X and Y are partners sharing profits in the ratio of 2:1. On 31st March, 2018 their Balance Sheet showed General Reserve of Rs. 60,000. It was decided that in future they will share profits and losses in the ratio of 3:2. Pass necessary Journal entry in each of the following alternative cases:-
(i) If General Reserve is not be shown in the new Balance Sheet.
(ii) If General Reserve is to be shown in the new Balance Sheet.

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Solution

Partnership accounting rules states that when any accumulated profit has to be shown in balance sheet, it is distributed amongs partners but when they are not to be shown, some percent of that reserve is distributed.
Journal entry in case 1:
General Reserve a/c Dr. Rs60,000
To X's capital a/c R40,000
To Y's capital a/c Rs20,000
Journal entry in case 2:
Y's capital a/c Dr. Rs4,000
To X's capital a/c Rs4,000.

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Q. X, Y are partners sharing profits in the ratio of 2 : 1 . On 31st March, 2018, their Balance Sheet showed General Reserve of ₹ 60,000. It was decided that in future they will share profits and losses in the ratio of 3 : 2 . Pass necessary journal entry in each of the following alternative cases :
(i) If General Reserve is not to be shown in the new Balance Sheet .
(ii) If General Reserve is to be shown in the new Balance Sheet .

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and

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are partners in a firm sharing profits and losses in the ratio

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. On

1^{s t}

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1 / 5^{t h}

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R s . 1, 50, 000

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X,Y and Z are in partnership sharing profits and losses in the ratio 5:3:2. On 1st April, 2015 they decided to share equally in future. On that date firm showed a balance in reserve Rs. 12,000 and profit and loss Rs 15,000. On that date goodwill was valued at Rs 48,000. Partners decided not to show goodwill in the books and they decided not to distibute General Reserve and Profit and Loss. Give necessary entry.

Q. Bhavya and Sakshi are partners in a firm, sharing profits and losses in the ratio of 3 : 2. On 31st March, 2018 their Balance Sheet was as under:

BALANCE SHEET OF BHAVYA AND SAKSHI
as at 31st March, 2018
Liabilities	Amount (₹)	Assets	Amount (₹)
Sundry Creditors	13,800	Furniture	16,000
General Reserve	23,400	Land and Building	56,000
Investment Fluctuation Fund	20,000	Investments	30,000
Bhavya's Capital	50,000	Trade Receivables	18,500
Sakshi's Capital	40,000	Cash in Hand	26,700
	1,47,200		1,47,200

The partners have decided to change their profit sharing ratio to 1 : 1 with immediate effect. For the purpose, they decided that:
(i) Investments to be valued at ₹ 20,000.
(ii) Goodwill of the firm be valued at ₹ 24,000.
(iii) General Reserve not to be distributed between the partners.
You are required to pass necessary Journal entries in the books of the firm. Show workings.