# P, Q, and R who are presently sharing profits and losses in the ratio of 5 : 4 : 1, decide to share future profits & Losses equally. The Balance Sheet shows the General Reserve of ₹ 80,000 and the Profit and Loss Account (Dr. Balance) of ₹ 20,000. The adjustment entry to give effect to the above without disturbing balances of General Reserve and Profit & Loss A/c is:

P, Q, and R who are presently sharing profits and losses in the ratio of 5 : 4 : 1, decide to share future profits & Losses equally. The Balance Sheet shows the General Reserve of ₹ 80,000 and the Profit and Loss Account (Dr. Balance) of ₹ 20,000. The adjustment entry to give effect to the above without disturbing balances of General Reserve and Profit & Loss A/c is:

P’s Capital A/c Dr. ₹ 10,000

Q’s Capital A/c Dr. ₹ 4,000

To R’s Capital A/c ₹ 14,000

b)

R’s Capital A/c Dr. ₹ 14,000

To P’s Capital A/c ₹ 10,000

To Q’s Capital A/c ₹ 4,000

c)

R’s Capital A/c Dr. ₹ 20,000

To P’s Capital A/c ₹ 10,000

To Goodwill A/c ₹ 10,000

d)

P’s Capital A/c Dr. ₹ 30,000

Q’s Capital A/c Dr. ₹ 30,000

To R’s Capital A/c ₹ 60,000

**Ans – b)**

Solution:-

Calculation of Sacrifice/gain of partners

Old Ratio = 5 : 4 : 1

New Ratio = 1 : 1 : 1

P = 5/10 – 1/3 = 15 – 10/30 = 5/30

Q = 4/10 – 1/3 = 12 – 10 = 2/30

R = 1/10 – 1/3 = 3 – 10/30 = – 7/30

Final Accumulated Profit = General Reserve – Profit & Loss (Dr)

Final Accumulated Profit = ₹ 80,000 – ₹ 20,000 = ₹ 60,000

P’s share = 60,000 × 5/30 = ₹ 10,000 (Credit)

Q’s share = 60,000 × 2/30 = ₹ 4,000 (Credit)

R’s share = 60,000 × 7/30 = ₹ 14,000 (Debit)

**Journal Entry:-**

R’s Capital A/c Dr. 14,000

To P’s Capital A/c 10,000

To Q’s Capital A/c 4,000