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Question

X, Y and Z who are presently sharing profits and losses in the ratio of 5 : 3 : 2 decide to share future profits and losses in the ratio of 2 : 3 : 5 . with effect from 1st April, 2018. Workmen Compensation Reserve appears at ₹ 1,20,000 in the Balance Sheet as at 31st March, 2018 and Workmen Compensation Claim is estimated at ₹ 1,50,000. Pass journal entries for the accounting treatment of Workmen Compensation Reserve.

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Solution

Journal

Date

Particulars

L.F.

Debit

Amount

(Rs)

Credit

Amount

(Rs)

Workmen Compensation Reserve A/c

Dr.

1,20,000

Revaluation A/c

Dr.

30,000

To Provision for Workmen Compensation Claim A/c

1,50,000

(Provision created and shortfall charged to Revaluation A/c)

X’s Capital A/c

Dr.

15,000

Y’s Capital A/c

Dr.

9,000

Z’s Capital A/c

Dr.

6,000

To Revaluation A/c

30,000

(Loss on revaluation transferred to Partners’ Capital A/c)


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