A, B and C who are presently sharing profits and losses in the ratio of 5 : 3 : 2 decide to share future profits and losses in the ratio of 2 : 3 : 5. Give the Journal entry to distribute ‘Workmen Compensation Reserve’ of ₹ 1,20,000 at the time of change in profit sharing ratio, when:
i) No other information is given
ii) there is no claim against it.
[Ans.: In both Cases: Dr. Workmen Compensation Reserve A/c by ₹ 1,20,000; Cr. A’s Capital A/c by ₹ 60,000; B’s Capital A/c by ₹ 36,000 and C’s Capital A/c by ₹ 24,000.]
Solution:-
