Vimal and Nirmal are partners in a firm sharing profits and losses in the ratio of 5 : 3. They admit Kailash into the firm on 1st April 2023, when their Balance Sheet was as follows:
| Liabilities | ₹ | Assets | ₹ |
| General Reserve Contingency Reserve Profit & Loss A/c Investment Fluctuation Reserve Workmen Compensation Reserve Employees Provident Fund |
30,000 2,700 18,000 9,000 7,200 20,000 |
Investments (Market Value ₹ 1,14,000) Advertisement Expenditure (Deferred Revenue) |
1,20,000 6,000 |
New Partner Krishna was admitted for 1/5th share of profits. A claim on account of workmen Compensation Reserve is estimated for ₹ 900.
Pass the necessary Journal entries to adjust accumulated profits and losses.
(b) A, B and C were partners sharing profits and losses in the ratio of 6 : 3 : 1. They take D into partnership with effect from 1st April, 2023. The new profit sharing ratio between A, B, C and D will be 3 : 3 : 3 : 1. They also decide to record the effect of the following without affecting their book values by passing an adjusting entry:
[Ans.: (a) Credit for share in Reserves & Profits: Murari ₹ 35,000; Vohra ₹ 24,000; Debit for share in Losses: Murari ₹ 3,600; Vohra ₹ 2,400 (Deferred Revenue); (b) Dr. C’s Current A/c by ₹ 36,000 and D’s Current A/c by ₹ 18,000; Cr. A’s Current A/c by ₹ 54,000.]
Solution :
