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ABC are the partner in sharing profit in ratio 2 ratio 2 ratio 1 did is at it she will get 14th share in future when that day there was carried balance of profit and loss account of Rs 40000 give general entries on account of changing in profit sharing ratio assembly not change in profit in the book?
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ABC are the partner in sharing profit in ratio 2 ratio 2 ratio 1 did i...
Introduction
In partnership accounting, the profit sharing ratio determines how the profits of the business are distributed among the partners. In this case, ABC are partners in sharing profit in the ratio of 2:2:1. However, there is a need to change the profit sharing ratio, and this will affect the balance of the profit and loss account.
General Entries
The general entries that need to be made to account for the changing profit sharing ratio are as follows:
1. To adjust the capital accounts of partners A and B:
Partner A's capital account will be debited with the amount of the share transferred to partner C, and credited with the amount of the new share.
Partner B's capital account will be debited with the amount of the share transferred to partner C, and credited with the amount of the new share.
Partner C's capital account will be credited with the amount of the share transferred from partners A and B.
2. To account for the change in profit sharing ratio:
The profit and loss account will be debited with the amount of the old share of partner C, and credited with the amount of the new share.
Partner C's capital account will be debited with the amount of the old share, and credited with the amount of the new share.
Explanation
The reason for adjusting the capital accounts of partners A and B is to reflect the new profit sharing ratio. The old share of partner C will be transferred to partners A and B in the proportion of their new shares. This means that partner A and B will have a higher share of the profits, while partner C will have a lower share.
The reason for debiting the old share of partner C in the profit and loss account is to remove it from the previous year's profits. The new share will be credited to reflect the new profit sharing ratio. This will ensure that the profit and loss account balance reflects the new profit sharing ratio.
The reason for debiting partner C's capital account with the old share and crediting it with the new share is to adjust his capital account to reflect the new profit sharing ratio. This will ensure that the capital accounts of all partners reflect their new shares.
Conclusion
In conclusion, the changing of the profit sharing ratio in a partnership requires adjustments to the capital accounts and the profit and loss account. The entries made must reflect the new profit sharing ratio and ensure that the balances of the accounts are accurate. The above general entries will help to account for the change in profit sharing ratio without affecting the balance of the profit and loss account.
In partnership accounting, the profit sharing ratio determines how the profits of the business are distributed among the partners. In this case, ABC are partners in sharing profit in the ratio of 2:2:1. However, there is a need to change the profit sharing ratio, and this will affect the balance of the profit and loss account.
General Entries
The general entries that need to be made to account for the changing profit sharing ratio are as follows:
1. To adjust the capital accounts of partners A and B:
Partner A's capital account will be debited with the amount of the share transferred to partner C, and credited with the amount of the new share.
Partner B's capital account will be debited with the amount of the share transferred to partner C, and credited with the amount of the new share.
Partner C's capital account will be credited with the amount of the share transferred from partners A and B.
2. To account for the change in profit sharing ratio:
The profit and loss account will be debited with the amount of the old share of partner C, and credited with the amount of the new share.
Partner C's capital account will be debited with the amount of the old share, and credited with the amount of the new share.
Explanation
The reason for adjusting the capital accounts of partners A and B is to reflect the new profit sharing ratio. The old share of partner C will be transferred to partners A and B in the proportion of their new shares. This means that partner A and B will have a higher share of the profits, while partner C will have a lower share.
The reason for debiting the old share of partner C in the profit and loss account is to remove it from the previous year's profits. The new share will be credited to reflect the new profit sharing ratio. This will ensure that the profit and loss account balance reflects the new profit sharing ratio.
The reason for debiting partner C's capital account with the old share and crediting it with the new share is to adjust his capital account to reflect the new profit sharing ratio. This will ensure that the capital accounts of all partners reflect their new shares.
Conclusion
In conclusion, the changing of the profit sharing ratio in a partnership requires adjustments to the capital accounts and the profit and loss account. The entries made must reflect the new profit sharing ratio and ensure that the balances of the accounts are accurate. The above general entries will help to account for the change in profit sharing ratio without affecting the balance of the profit and loss account.
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ABC are the partner in sharing profit in ratio 2 ratio 2 ratio 1 did is at it she will get 14th share in future when that day there was carried balance of profit and loss account of Rs 40000 give general entries on account of changing in profit sharing ratio assembly not change in profit in the book?
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ABC are the partner in sharing profit in ratio 2 ratio 2 ratio 1 did is at it she will get 14th share in future when that day there was carried balance of profit and loss account of Rs 40000 give general entries on account of changing in profit sharing ratio assembly not change in profit in the book? for Commerce 2025 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about ABC are the partner in sharing profit in ratio 2 ratio 2 ratio 1 did is at it she will get 14th share in future when that day there was carried balance of profit and loss account of Rs 40000 give general entries on account of changing in profit sharing ratio assembly not change in profit in the book? covers all topics & solutions for Commerce 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for ABC are the partner in sharing profit in ratio 2 ratio 2 ratio 1 did is at it she will get 14th share in future when that day there was carried balance of profit and loss account of Rs 40000 give general entries on account of changing in profit sharing ratio assembly not change in profit in the book?.
ABC are the partner in sharing profit in ratio 2 ratio 2 ratio 1 did is at it she will get 14th share in future when that day there was carried balance of profit and loss account of Rs 40000 give general entries on account of changing in profit sharing ratio assembly not change in profit in the book? for Commerce 2025 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about ABC are the partner in sharing profit in ratio 2 ratio 2 ratio 1 did is at it she will get 14th share in future when that day there was carried balance of profit and loss account of Rs 40000 give general entries on account of changing in profit sharing ratio assembly not change in profit in the book? covers all topics & solutions for Commerce 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for ABC are the partner in sharing profit in ratio 2 ratio 2 ratio 1 did is at it she will get 14th share in future when that day there was carried balance of profit and loss account of Rs 40000 give general entries on account of changing in profit sharing ratio assembly not change in profit in the book?.
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