Bhavya and Sakshi are partners in a firm, sharing profits and losses in the ratio of 3 : 2. On 31st March 2018, their Balance Sheet was as under:
Balance Sheet of Bhavya and Sakshi as at 31st March, 2018
| Liabilities | ₹ | Assets | ₹ |
| Sundry Creditors General Reserve Investment Fluctuation Fund Bhavya’s Capital Sakshi’s Capital |
13,800 23,400 20,000 50,000 40,000 |
Furniture Land and Building Investments Trade Receivables Cash in Hand |
16,000 56,000 30,000 18,500 26,700 |
| 1,47,200 | 1,47,200 |
The partners have decided to change their profit sharing ratio to 1 : 1 with immediate effect. For the purpose. they decided that:
(i) Investments to be valued at ₹ 20,000.
(ii) Goodwill of the firm be valued at ₹ 24,000.
(iii) General Reserve not be distributed between the partners.
You are required to pass necessary Journal entries in the books of the firm. Show workings.
Solution:-
