54 :-
(a) An extract of the balance sheet of Murari and Vohra sharing profits and losses in the ratio of 3:2 was as under:
New partner Krishna was admitted for 1/5th share of profits. A claim on account of workmen compensation reserve is estimated for Rs 900
Pass the necessary journal entries to adjust accumulated profits and losses.
(c) A, B and C were partners sharing profits and losses in the ratio of 6 : 3 : 1. They take D into partnership with effect from 1st April, 2023. The new profit sharing ratio between A, B, C and D will be 3 : 3 : 3 : 1. They also decide to record the effect of the following without affecting their book values by passing an adjusting entry:
BOOK VALUES
General reserves 1,50,000
Contingency reserve 60,000
Profit and loss A/c (Cr.) 90,000
Advertisement suspense A/c (Dr.) 1,20,000
Pass the necessary adjustment entry through the partner’s current account.
Solution :-
WORKING NOTES
(i) Calculation of sacrificing/gaining share of partners
Old ratio = 6:3:1
New ratio = 3:3:3:1
A = 6/10 – 3/10 = 3/10
B = 3/10 – 3/10 = 0
C = 1/10 – 3/10 = -2/10 (gain)
(ii) Calculation of accumulated profits
General reserve 1,50,000
Contingency reserve 60,000
Profit and loss A/c (Cr.) 90,000
3,00,000
Less: Advertisement suspense 1,20,000
Net accumulated profit 1,80,000
(iii) Calculation of partners share in net accumulated profits
A = 1,80,000 x 3/10 = Rs 54,000 (Cr.)
B = 1,80,000 x 0 = 0
C = 1,80,000 x 2/10 = Rs 36,000 (Dr.)
D = 1,80,000 x 1/10 = Rs 18,000 (Dr.)