X, Y and Z who were sharing profits and losses in the ratio of 5 : 3 : 2 decided to share future profits in the ratio of 2 : 3 : 5.
Given the Journal entry to distribute ‘Workmen Compensation Reserve’ of ₹ 1,20,000 at the time of change in profit sharing ratio, when there is a claim of ₹ 80,000 against it.
[Ans.: Dr. Workmen Compensation Reserve A/c by ₹ 1,20,000; Cr. X’s Capital A/c by ₹ 20,000; Y’s Capital A/c by ₹ 12,000; Z’s Capital A/c by ₹ 8,000 and Workmen Compensation Claim A/c by ₹ 80,000.]
Solution:-
