As on 1.apr.2017 , A and B are two partners sharing profit and loss in the ratio 7:5.
They admit C for 1/5th share.
on this date , profit and loss account showed a balance of rs 45000.partners do not want to distribute the profit but prefer to record it by passing an adjustment entry.
YOU ARE REQUIRED TO GIVE THE JOURNAL ENTRY...
The balance will be adjusted in sacrificing and gaining ratios.
A & B sacrificed in the ratio of their old sharing ratio in the absence of any information, i.e. 7:5. C gained 1/5.
A sacrificed 7/12 of 1/5 = 7/60, B = 5/12 of 1/5 = 1/12.
Journal entry:
C's capital a/c Dr. 9,000 (45,000 x 1/5)
To A's capital a/c 5,250 (45,000 x 7/60)
To B's capital a/c 3,750 (45,000 x 1/12)
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