Page 77 - DEBKVOL-1

Chapter 4 Change in Profit-Sharing Ratio Among the Existing Partners 4.9
.
4. Dr. PARTNERS’ CAPITAL ACCOUNTS Cr.
Particulars Jaspal Apoorv Ankit Particulars Jaspal Apoorv Ankit
` ` ` ` ` `
To Jaspal’s Capital A/c ... 10,000 ... By Balance b/d 5,00,000 3,00,000 2,00,000
To Partners’ Current A/cs 2,20,000 ... 44,000 By Revaluation A/c 10,000 6,000 4,000
To Balance c/d 4,00,000 4,00,000 2,00,000 By General Reserve A/c 1,00,000 60,000 40,000
By Apoorv’s Capital A/c 10,000 ... ...
By Partner’s Current A/c ... 44,000 ...
6,20,000 4,10,000 2,44,000 6,20,000 4,10,000 2,44,000

Illustration 4 (Distribution of General Reserve and Accumulated Profits).
A, B and C are partners sharing profits in the ratio of 3 : 2 : 1. On 1st April, 2018, they
decided to share the profits equally. On that date, there was a credit balance of ` 1,20,000
in their Profit and Loss Account and ` 60,000 in the General Reserve. Pass necessary Journal
entry in the books of the firm.
Solution: JOURNAL
Date Particulars L.F. Dr. (`) Cr. (`)
2018
April 1 Profit and Loss A/c ...Dr. 1,20,000
General Reserve A/c ...Dr. 60,000
To A’s Capital A/c 90,000
To B’s Capital A/c 60,000
To C’s Capital A/c 30,000
(Undistributed profits and general reserve, transferred to
Capital Accounts of the Partners in their old profit-sharing ratio)
Illustration 5.
Neha, Anita and Aqsa are partners sharing profits and losses in the ratio 4 : 4 : 2. Their
Balance Sheet as at 31st March, 2018 was as follows:
Liabilities ` Assets `
Capital A/cs: Buildings 2,00,000
Neha 3,50,000 Machinery 3,00,000
Anita 3,00,000 Computers 50,000
Aqsa 2,50,000 9,00,000 Investments (Market Value ` 1,10,000) 1,50,000
Investments Fluctuation Reserve 50,000 Sundry Debtors 2,00,000
Sundry Creditors 60,000 Cash in Hand 15,000
Outstanding Liabilities 5,000 Cash at Bank 85,000
Advertisement Suspense 15,000
10,15,000 10,15,000
They decided to share profits and losses equally w.e.f. 1st April, 2018. They agreed that:
(i) The value of Buildings be brought down by 10%.
(ii) The value of Machinery be brought down by 5%.
(iii) A Provision for Doubtful Debts be created @ 5% on Sundry Debtors.
(iv) An unrecorded asset (computer) of value ` 15,000 be brought into books.