Question

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.

Answer 1

JOURNAL
$\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F.}& \text{Debit}& \text{Credit}\\ & & & & \text{(Rs)}& \text{(Rs)}\\ & \text{Y's Capital A/c}& \text{Dr.}& & 2,500& \\ & \text{Z's Capital A/C}& \text{Dr.}& & 10,000& \\ & \text{To X's Capital A/c}& & & & 12,500\\ & \text{(Being adjustment of accumulated profit and losses and}& & & & \\ & \text{goodwill due to change in ratio)}& & & & \end{array}$

Working Notes:

Calculation of sacrificing ratio = Old ratio - New ratio

$X=\frac{5}{10}-\frac{1}{3}=\frac{(15-10)}{30}=\frac{5}{30}$ (Sacrifices)

$Y=\frac{3}{10}-\frac{1}{3}=\frac{(9-10)}{30}=-\frac{1}{30}$ (Gains)

$Z=\frac{2}{10}-\frac{1}{3}=\frac{(6-10)}{30}=-\frac{4}{30}$ (Gains)

$\begin{array}{ccc}\text{General Reserve}& =& \text{Rs}12,000\\ \text{Profit and Loss}& =& \text{Rs}15,000\\ \text{Goodwill}& =& \text{Rs}48,000\\ & & \text{Rs}\overline{\underset{–}{75,000}}\end{array}$

Due to change in ratio calculation of

X's share = $75,000\times \frac{5}{30}=\text{Rs}12,500$

Y's share = $75,000\times \frac{1}{30}=\text{Rs}2,500$

Z's share = $75,000\times \frac{4}{30}=\text{Rs}10,000$