A and B are partners in a firm sharing profits in the ratio of 2 : 1.

They decided that with effect from 1st April 2022, they would share profits in the ratio of 3 : 2.

But, this decision was taken after the profit for the year ended 31st March 2023 of ₹ 90,000 was distributed in the old profit sharing ratio.

Firm’s goodwill was valued on the basis of aggregate of two year’s profits preceding the date decision became effective.

Profits for the years ended 31st March 2021 and 2022 were ₹ 60,000 and ₹ 75,000 respectively.

Capital Accounts of the partners as at 31st March 2023 stood at ₹ 1,50,000 for A and ₹ 90,000 for B.

Pass necessary Journal entries and prepare Partner’s Capital Accounts.

Anurag Pathak Changed status to publish April 26, 2023