23 :- X, Y, and Z are sharing profits and losses in the ratio of 5 : 3 : 2. They decide to share future profits and losses in the ratio of 2 : 3 : 5 with effect from 1st April, 2025. They also decide to record the effect of the following accumulated profits, losses and reserves without affecting their book values by passing a single entry.
Book values
General reserve 6,000
Profit and loss A/c (credit) 24,000
Advertisement suspense A/c 12,000
Pass an adjustment entry.
Solution :-
WORKING NOTES :-
Calculation of gaining and sacrificing ratio
Old ratio = 5:3:2
New ratio = 2:3:5
X = 5/10 – 2/10 = 3/10 (sacrifice)
Y = 3/10 – 3/10 = 0 (no change)
Z = 2/10 – 5/10 = -3/10 (gain)