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:
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:
| Book Figure (₹) | Realised Figure (₹) | |
| Building | 1,00,000 | 1,50,000 |
| Machinery | 1,50,000 | 1,40,000 |
| Trade Creditors | 50,000 | 45,000 |
| Outstanding Rent | 45,000 | 60,000 |
The necessary adjusting entry will involve
a) Dr. Shiv and Cr. Om with ₹ 10,000
b) Dr. Om and Cr Shiv with ₹ 10,000
c) Dr. Shiv and Cr. Om with ₹ 5,000
d) Dr. Om and Cr. Shiv with ₹ 9,000
Anurag Pathak Changed status to publish May 5, 2023
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 share in Revaluation Profit = 30,000 × 1/6 = ₹ 5,000 (credit)
Shiv’s Capital A/c Dr. 5,000
To Om’s Capital A/c 5,000
Anurag Pathak Changed status to publish May 4, 2023
