A, B and C were partners in a firm sharing profits in the ratio of 1 : 3 : 2. They decided that with effect from 1st April, 2024, they will share profits in the ratio of 4 : 6 : 5
A, B and C were partners in a firm sharing profits in the ratio of 1 : 3 : 2. They decided that with effect from 1st April, 2024, they will share profits in the ratio of 4 : 6 : 5. For this purpose the goodwill of the firm is valued at the total of preceding three year’s profits. The profits were:
Reserves and Profits appeared in the balance sheet at ₹ 40,000 and ₹ 30,000 respectively. Partners do not want to distribute the reserves and profits appearing in the balance Sheet. Pass a single journal entry to record the change.
[Ans. Debit A and Credit B by ₹ 25,000.]
| ₹ | |
| 2019 – 20 | 40,000 |
| 2020 – 21 | 10,000 (Loss) |
| 2021 – 22 | 80,000 (Loss) |
| 2022 – 23 | 1,20,000 |
| 2023 – 24 | 1,40,000 |
Anurag Pathak Answered question August 6, 2024
