Sonu, Sumit and Sahil are partners in a firm sharing profits and losses in the ratio of 5 : 3 : 2. They decide to share profits and losses in the ratio of 2 : 5 : 3 with effect from 1st April, 2023. Land (having book value of ₹ 1,00,000) was found undervalued by ₹ 5,00,000.
Sonu, Sumit and Sahil are partners in a firm sharing profits and losses in the ratio of 5 : 3 : 2.
They decide to share profits and losses in the ratio of 2 : 5 : 3 with effect from 1st April, 2023. Land (having book value of ₹ 1,00,000) was found undervalued by ₹ 5,00,000.
The stock (having book value of ₹ 4,00,000) was found overvalued by ₹ 3,00,000.
Pass the necessary adjustment entry without affecting the existing figures.
Anurag Pathak Changed status to publish May 7, 2023
Calculation of Revaluation profit/loss
Land undervalued = ₹ 5,00,000
Stock Overvalued = ₹ (3,00,000)
Revaluation Profit = ₹ 2,00,000
Calculation of Sacrifice/gain of partners
Old Ratio = 5 : 3 : 2
New Ratio = 2 : 5 : 3
Sonu = 5/10 – 2/10 = 5 – 2/10 = 3/10 (sacrifice)
Sumit = 3/10 – 5/10 = 3 – 5/10 = – 2/10 (gain)
Sahil = 2/10 – 3/10 = 2 – 3/10 = – 1/10 (gain)
Journal entry of revaluation profit without affecting the existing figure.
Sumit’s share = 2,00,000 × 2/10 = ₹ 40,000 (Debit)
Sahil’s share = 2,00,000 × 1/10 = ₹ 20,000 (Debit)
Sonu’s Share = 2,00,000 × 3/10 = ₹ 60,000 (Credit)
Sumit’s Capital A/c Dr. 40,000
Sahil’s Capital A/c Dr. 20,000
To Sonu’s Capital A/c ₹ 60,000
Anurag Pathak Changed status to publish May 7, 2023
