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...
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partnership accounts
Replies (5)
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)
thank you for answering the question..
because in the book the 9000 is distributed between A & B equally.
because in the book the 9000 is distributed between A & B equally.
In the question, it must have been either mentioned or assumed that the sacrificing ratio is equal or 1:1.
question is silent about sacrificing ratio.
in question it is only given that c is admitted for 1/5th share.
in question it is only given that c is admitted for 1/5th share.
It might be a mistake. Books can have errors too.
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