25:- Hari, Kunal and Uma are partners in a firm sharing profits and losses in the ratio of 5 ; 3 : 2. From 1st April, 2018 they decided to share future profits and losses in the ratio of 2 : 5 : 3. Their Balance sheet showed a balance of Rs 75,000 in the Profit and Loss Account and a balance of Rs 15,000 in investment Fluctuation Fund. For this purpose, it was agreed that:
- Goodwill of the firm was valued at Rs 3,00,000.
- That investment (having a book value of Rs 50,000) was valued at Rs 35,000.
- That stock having a book value of Rs 50,000 be depreciated by 10%
Pass the necessary Journal entries for the above in the books of the firm.
Solution :-
WORKING NOTES :-
Old ratio = 5:3:2
New ratio = 2:5:3
Hari = 5/10 – 2/10 = 3/10 (sacrifice)
Kunal = 3/10 – 5/10 = -2/10 (gain)
Uma = 2/10 – 3/10 = -1/10 (gain)