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:
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:
| General Reserve | ₹ 35,000 |
| Profit and Loss (Cr.) | ₹ 15,000 |
| Advertisement Suspense A/c (Dr.) | ₹ 20,000 |
The necessary adjustment entry will be
a) Dr. Z and Cr. X by ₹ 9,000
b) Dr. X and Cr. Y by ₹ 9,000
c) Dr. X and Cr. Y by ₹ 18,000
d) Dr. Y and Cr. X by ₹ 9,000
Anurag Pathak Changed status to publish May 5, 2023
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 = ₹ 9,000 (credit)
Z share = 30,000 × 3/10 = ₹ 9,000 (debit)
Journal entry
Z’s Capital A/c Dr. 9,000
To X’s Capital A/c 9,000
Anurag Pathak Changed status to publish May 4, 2023
