Ajeet, Vijeet and Sujeet are partners in a firm sharing profits and

27 :-  Ajeet, Vijeet and Sujeet are partners in a firm sharing profits and losses in the ratio of 5 : 3 : 2. They decide to share profits and losses in the ratio of 2 : 5 : 3 with effect from 1st Apirl, 2025. Land (having book value of Rs 1,00,000) was found undervalued by Rs 2,50,000 and stock (having book value of Rs 4,00,000) was found overvalued by Rs 3,00,000.
Pass the necessary adjusting entry without affecting the existing book value.

Solution :-

WORKING NOTES :–
(i) Calculation of gaining and sacrificing share
Old ratio = 5:3:2
New ratio = 2:5:3
Ajeet = 5/10 – 2/10 = 3/10 (sacrifice)
Vijeet = 3/10 – 5/10 = -2/10 (gain)
Sujeet = 2/10 – 3/10 = -1/10 (gain)

(ii)Calculation of revaluation profit/loss
Land was found undervalued by 2,50,000
Stock was found overvalued by (3,00,000) Loss on revaluation (50,000)

(iii)Calculation of partner’s share in revaluation loss
Ajeet’s share = 50,000 x 3/10 = Rs 15,000 (debit)
Vijeet’s share = 50,000 x 2/10 = Rs10,000 (credit)
Sujeet’s share = 50,000 x 1/10 = Rs 5,000 (credit)