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Bhavya and Sakshi are partners in a firm, sharing profits and losses in the ratio of 3 : 2.

On 31st March 2018, their Balance Sheet was as under:

Balance Sheet of Bhavya and Sakshi as at 31st March, 2018

Liabilities ₹ Assets ₹
Sundry Creditors

General Reserve

Investment Fluctuation Reserve

Bhavya’s Capital

Shakshi’s Capital

13,800

23,400

20,000

50,000

40,000

Furniture

Land and Building

Investments

Trade Receivables

Cash in Hand

16,000

56,000

30,000

18,500

26,700

1,47,200 1,47,200

The Partners have decided to change their profit sharing ratio to 1 : 1 with immediate effect.

For the purpose, they decided that:

i) Investments to be valued at ₹ 20,000

ii) Goodwill of the firm be valued at ₹ 24,000

iii) General Reserve not to be distributed between the partners.

You are required to pass necessary Journal entries in the books of the firm. Show workings.

Anurag Pathak Changed status to publish April 30, 2023
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