Mita, Gopal and Farhan were partners sharing profits and losses in the ratio 3 : 2 : 1. On 31st March, 2023 they decided to change the profit sharing ratio to 5 : 3 : 2. On this date, the Balance Sheet showed deferred advertisement expenditure ₹ 30,000 and contingency reserve ₹ 9,000.
Goodwill was valued at ₹ 4,80,000. Pass the necessary journal entries for the above transactions in the books of the firm on its reconstitution.
State the ratio in which the partners share profits or losses on the revaluation of assets and liabilities when there is a change in profit sharing ratio amongst the existing partners.
A, B, C and D were partners in a firm sharing profits in the ratio of 3 : 2 : 3 : 2. On 1st April, 2016 their balance sheet was as follows:
Prepare the revaluation account, partners' capital accounts and the balance sheet of the reconstituted firm.
Kumar, Gupta and Kavita were partners in firm sharing profits and losses equally. The firm was engaged in the storage and distribution of canned juice and its godowns were located at three different places in the city. Each godown was being managed individually by Kumar, Gupta and Kavita. Because of increase in business activities at the godown managed by Gupta, he had to devote more time. Gupta demanded that his share in the profits of the firm be increased, to which Kumar and Kavita agreed. The new profit sharing ratio was agreed to be 1 : 2 : 1. For this purpose, the goodwill of the firm was valued at two years' purchase of the average profits of last five years. The profits of the last five years were as follows:
Calculate the goodwill of the firm.
Pass necessary journal entry for the treatment of goodwill on change in profit sharing ratio of Kumar, Gupta and Kavita.
L, M and N were partners in a firm sharing profits in the ratio of 2 : 3 : 5. From 1st April, 2023 they decided to share the profits in the ratio of 1 : 2 : 2. On this date, the Balance Sheet showed a credit balance of ₹ 1,17,000 in General Reserve and a debit balance of ₹ 35,000 in Profit and Loss account. The goodwill of the firm was valued at ₹ 5,00,000. The revaluation of assets and reassessment of liabilities resulted into a gain of ₹ 30,000.
Pass necessary journal entries for the above transactions on the reconstitution of the firm.
P, Q, and R were partners in firm sharing profits in the ratio of 1 : 1 : 2 on 31st March, 2023 their balance sheet showed a credit balance of ₹ 9,000 in the profit and loss account and a Workmen Compensation Fund of ₹ 64,000. From 1st April, 2023 they decided to share profits in the ratio of 2 : 2 : 1. For this purpose it was agreed that:
Pass necessary journal entries on reconstitution of the firm.
Raka, Seema and Mahesh were partners sharing profits and losses in the ratio of 5 : 3 : 2. With effect from 1st April 2019, they mutually agreed to share profits and losses in the ratio of 2 : 2 : 1.
On that date, there was a workmen’s compensation fund of ₹ 90,000 in the books of the firm. It was agreed that:
Pass necessary journal entries for the above transactions in the books of the firm.
What is meant by change in Profit-Sharing Ratio?
S, T, U and V were partners in a firm sharing profits in the ratio of 4 : 3 : 2 : 1. On 1st April, 2019 their balance sheet was as follows
[Balance Sheet table]
From April 1, 2019, they decided to share future profits equally. For this purpose the followings were agreed upon:
Pass necessary Journal entries for the above transactions in the books of the firm.
Hari, Kunal and Uma are partners in a firm sharing profits and losses in the ratio of 5 : 3 : 2. From 1st April, 2023 they decided to share future profits and losses in the ratio of 2 : 5 : 3. Their Balance Sheet showed a balance of ₹ 75,000 in the Profit and Loss Account and a balance of ₹ 15,000 in Investment Fluctuation Fund. For this purpose, it was agreed that:
Pass the necessary journal entries for the above in the books of the firm.