ASSIGNMENT
CHANGE IN PROFIT SHARING RATIO
1) A,B and C are equal partners in firm. They decided to share the profits and losses in the ratio of 2:2:1. If
goodwill of the firm is to be valued at 1,80,000 , Pass the Journal Entries if Goodwill A/c is opened.
[Hint: Raising and writing off]
2) Mridul and Kartik are partners for 1:1. The effect from new Accounting year they decided to change the
PSR. The goodwill of the firm for this purpose is to be valued at 2 years purchase of Average profits of last 3
years. The profits for last 3 years were 35000, 28000 and 27000 resp. The partners passed the following
entry to give effect to the adjustment of goodwill:
Kartik’s Capital A/c Dr. 10,000
To Mridul’s Capital A/c 10,000
Calculate NPSR and Sacrifice and gain of each partner.
3) A and B are partners for 3:2. They decided to share the profits and losses equally. On the date
WCR appear in the books is 10,000. Pass the Journal Entries in the following cases:
(a) If there is no information
(b) If the claim is estimated as 4000.
(c) If the claim is estimated as 10,000.
(d) If the claim is estimated as 12,000.
4) A and B are partners for 2:3. They decided to share future profits and losses in the ratio of 2:1.
An extract of Balance Sheet is given as below:
LIABILITIES AMOUNT ASSETS AMOUNT
IFR 5,000 Investments 1,00,000
Pass the entries in the following cases:
(a) If no other information is given.
(b) If the market value of investments is Rs. 97,000.
(b) If the market value of investments is Rs. 95,000.
(c) If the market value of investments is Rs. 92,000.
(d) If the market value of investments is Rs. 1,10,000.
5) A, B and C are partners for 1:1:1. Their NPSR is 2:2:1. They decided to record the effect of the
following, without effecting the book value:
(a) General Reserve………………………50,000
(b) Profit & Loss (cr) …………………….20,000
(c) IFR…………………………………….10,000
(d) WCR…………………………………..12,000
(e) Advertisement Suspense A/c………… 2000
Pass the Journal entry assuming there is no liability against WCR and no change in IFR. The
capitals of partners are fixed.
6) Narang, Suri and Bajaj are partners in a firm sharing profits and losses in the ratio of 3:2:1. The
Balance sheet as at April 1, 2019 was as follow:
Balance Sheet
LIABILITIES AMOUNT ASSETS AMOUNT
Bills Payable 12,000 Freehold Premises 40,000
Creditors 18,000 Machinery 30,000
Reserves 12,000 Furniture 12,000
Capital Accounts: Stock 22,000
Narang 30,000 S. Debtors 20,000
Suri 30,000 Less Pro. For DD 1,000 19,000
Bajaj 28,000 88,000 Cash 7,000
1,30,000 1,30,000
From the above date partners decided to share the profits and losses equally. For this purpose, the
goodwill of the firm was valued at 60,000. The partners also agreed for the following:
a) Freehold premises and the stock to be appreciated by 20% and 15% resp.
b) Machinery and Furniture to be depreciated by 10% and 12.5%.
c) Provision of Bad debts to be increased to 1500.
d) The total capital of the reconstituted firm will be 1,20,000 to be adjusted according to the NPSR
by bringing or paying in cash as the case may be.
Prepare Revaluation A/c, Partners’ Capital A/c and Balance Sheet of Reconstituted firm.
