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Hari, Sunil and Anil are partners sharing profits equally which they changed to 2 : 2 : 1 w.e.f 1st April, 2023. Their capitals on that date were ₹ 5,00,000 each and the balance in Current Accounts ₹ 40,000 (Cr.); ₹ 30,000 (Cr.) and ₹ 20,000 (Dr.) respectively. On that date, balances also existed in the books as follows:

Ans – a) Explanation:- The amount to be credited to partners = General Reserve + WCR – WCC 1,00,000 + 1,00,000 – 50,000 = ₹ 1,50,000

Anurag Pathak
May 5, 2023

Pawan, Raman and Shravan are partners. Before changing their profit-sharing ratio to 5 : 3 : 2, they were sharing profits equally. Workmen Compensation Reserve existed at ₹ 1,00,000 against which a claim existed at ₹ 20,000. The amount that will be credited to their Capital Accounts in their old profit-sharing ratio will be

Ans – b) Explanation:- The amount to be credited to partners = WCR – WCC = ₹ 1,00,000 – ₹ 20,000 = ₹ 80,000

Anurag Pathak
May 5, 2023

X and Y are partners sharing profits in the ratio of 3 : 2. They decide to share future profits in the ratio of 2 : 3. Investment Fluctuation Reserve of ₹ 50,000 appearing in the Balance Sheet, if no other information is available for change in the value of investments, will be

Ans – b) Explanation:- In the absence of any other information, Investment Fluctuation Reserve is distributed among partners in the old profit-sharing ratio.

Anurag Pathak
May 5, 2023

Due to change in profit sharing ratio, X’s sacrifice is 3/10, while z’s gain is 3/10. They decide to record the effect of the following without affecting the book figures. by passing an adjusting entry:

Ans – a) Solution:- Final Accumulated Profit = General Reserve + Profit and Loss (cr.) + Advertisement Suspence A/c (Dr.) Final Accumulated Profit = 35,000 + 15,000 – 20,000 = ₹ 30,000 X share = 30,000 × 3/10 = ₹…

Anurag Pathak
May 5, 2023

Due to change in the profit sharing ratio, Shiv’s gain is 1/6, while Om’s sacrifice is 1/6. They decide to record the effect of the following revaluation without affecting the book values of the assets and liabilities, by passing a single adjusting entry:

Ans – c) Solution:- Building – ₹ 50,000 Machinery – (₹10,000) Trade Creditors – ₹ 5,000 Outstanding Rent – (₹ 15,000) Revaluation Profit = ₹ 30,000 Shiv share in Revaluation Profit = 30,000 × 1/6 = ₹ 5,000 (debit) Om…

Anurag Pathak
May 5, 2023

Meera, Myra and Neera were partners sharing profits in the ratio of 2 : 2 : 1. They decided to share future profits in the ratio of 7 : 5 : 3 with effect from 1st April, 2019. Their Balance Sheet as on that date showed a balance of ₹ 45,000 in Advertisement Suspense Account.

Ans – a) Solution:- Advertisement suspense will be written off in the old ratio among partners. Meera share = 45,000 × 2/5 = ₹ 18,000 Myra share = 45,000 × 2/5 = ₹ 18,000 Neera share = 45,000 × 1/5…

Anurag Pathak
May 4, 2023

Raman and Rajan were partners in a firm sharing profits or losses in the ratio of 3 : 1. With effect from 1st January, 2023, they agreed to share profits in the ratio of 2 : 1. Due to change in profit sharing ratio, Rajan’s gain or sacrifice will be

Ans – a) Solution:- Old Ratio = 3 : 1 New Ratio = 2 : 1 Rajan = 1/4 – 1/3 = 3 – 4/12 = – 1/12 (gain)

Anurag Pathak
May 4, 2023

Raju and Gaurav were partners in a firm sharing profits and losses in the ratio of 2 : 1. With effect from 1st January, 2023, they decided to share profits and losses equally. Individual partner’s gain or sacrifice due to change in the ratio will be

Ans – b) Solution:- Old Ratio = 2 : 1 New Ratio = 1 : 1 Raju = 2/3 – 1/2 = 4 – 3/6 = 1/6 (sacrifice) Gauarv = 1/3 – 1/2 = 2 – 3/6 = – 1/6…

Anurag Pathak
May 4, 2023

At the time of reconstitution of the firm (by way of change in profit sharing ratio/admission/retirement or death of a partner), gaining partner compensates the sacrificing partner by paying proportionate amount of

Ans – a) Explanation:- at the time of reconstitution of the firm, the gaining partner compensates the amount of goodwill to the sacrificing partner. It is done so that gaining partner does not remain in advantage and sacrificing partner in…

Anurag Pathak
May 4, 2023

Increase and decrease in the value of assets and liabilities are recorded through

Ans – d) Explanation:- The increase and decrease in assets and liabilities are first recorded in revaluation account. The final profit or loss of revaluation is distributed among partners.

Anurag Pathak
May 4, 2023

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