P, Q and R are partners sharing profits equally. They decided that in future R will get 1/7 share in profits. On the day of change, firm’s Goodwill is valued at ₹ 42,000. Give Journal Entries arising on account of change in profit sharing ratio

P, Q and R are partners sharing profits equally. They decided that in future R will get 1/7 share in profits. On the day of change, firm’s Goodwill is valued at ₹ 42,000. Give Journal Entries arising on account of change in profit sharing ratio.

[Ans. Debit P and Q by ₹ 4,000 each and credit R by ₹ 8,000.]

Hint.: New Ratios 3/7 : 3/7 : 1/7 P and Q gain 2/21 each and R sacrifices 4/21.