Question

X and Y were partners in a firm sharing profits and losses in the ratio of 2 : 1. Z was admitted for 1/3rd share in the profits. On the date of Z's admission, the Balance Sheet of X and Y showed General Reserve of ₹ 2,50,000 and a credit balance of ₹ 50,000 in Profit and Loss Account. Pass necessary Journal entries on the treatment of these items on Z's admission.

Answer 1

Journal
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
	General Reserve A/c	Dr.		2,50,000
	Profit and Loss A/c	Dr.		50,000
	To X’s Capital A/c				2,00,000
	To Y’s Capital A/c				1,00,000
	(Adjustment of balance in General Reserve A/c and P&L A/c in old ratio)

Working Notes:

WN1 Calculation of Share of General Reserve & P&L A/c

$$\begin{gathered} \mathrm{X}\text{'}\mathrm{s}\mathrm{share}=3,00,000\times \frac{2}{3}=2,00,000 \\ \mathrm{Y}\text{'}\mathrm{s}\mathrm{share}=3,00,000\times \frac{1}{3}=1,00,000 \end{gathered}$$