Chapter 4 – Change In Profit Sharing Ratio Among The Existing Partners – TS Grewal 2022
Question 8
A and B are partners in a firm sharing profits in the ratio of 2:1 They decided that with effect from 1st April 2021, they would share profits in the ratio 3:2. But, this decision was taken after the profit for the year ended 31st March 2022 of ₹90,000 was distributed in the old ratio.
Firm’s goodwill was valued on the basis of aggregate of two year’s profits preceding the date decision became effective.
Profits for the years ended 31st March, 2020 and 2021 were ₹60,000 and ₹75,000 respectively. It was decided that goodwill account will not be opened in the books of the firm and necessary adjustment be made through capital account which on 31st March, 2022 stood at ₹1,50,000 for A and ₹90,000 for B.
Pass necessary Journal entries and prepare partners capital accounts.
Solution:
A and B are partners in a firm sharing profits in the ratio 2:1
