A,G and R were partner sharing profit in 5:3:2 . G retired and on that date there was accumulated profit of 70000. Partners decided not to distribute this profit to which G also agreed, forgoing his share in accum. profit . Later, K was admitted for 1/3rd share in profit which she acquired from A . Pass necessary Journal entry for Accum. profit on admission of K . Also explain the procedure .

Question

Answer

I guess you have to distribute the accum. profit to A and R in their old ratio 5:2 before admitting K in the company i.e. A will get 50000 and R will get 20000. and G as agreed will get nothing. Is the answer correct?

Answer

Profit & Loss A\c. Dr. 70,000
To A's Capital A\c. 50,000
To R's Capital A\c. 20,000

Answer

Journal Entry for Accumulated Profit on Admission of K:

Procedure:

1. Calculation of Accumulated Profit:
- The accumulated profit is the profit that has been earned but not distributed among the partners.
- In this case, the accumulated profit is $70,000.

2. Sharing Ratio:
- The sharing ratio of partners A, G, and R is 5:3:2.
- This means that A is entitled to 5/10 of the profit, G is entitled to 3/10 of the profit, and R is entitled to 2/10 of the profit.

3. G's Forfeiture of Share in Accumulated Profit:
- G has agreed to forgo his share in the accumulated profit.
- This means that G's share of the accumulated profit will be distributed among the remaining partners, A and R, in their profit sharing ratio.

4. Calculation of G's Forfeited Share:
- G's share in the accumulated profit can be calculated by multiplying the accumulated profit by G's profit sharing ratio.
- G's profit sharing ratio is 3/10, so his forfeited share is $70,000 * 3/10 = $21,000.

5. Admission of K:
- K is being admitted to the partnership and she is acquiring 1/3rd share in the profit from partner A.
- This means that K will be entitled to 1/3 of A's share in the profit.

Journal Entry:

Date | Particulars | L.F. | Debit ($) | Credit ($)
---- | ----------- | ---- | --------- | ----------
Accumulated Profit A/c | | | | 70,000
To G's Capital A/c | | | 21,000 |
To A's Capital A/c | | | 49,000 |
To R's Capital A/c | | | 35,000 |
To K's Capital A/c | | | | 35,000

- The Accumulated Profit A/c is debited with $70,000 as it is the amount of accumulated profit.
- G's Capital A/c is credited with $21,000 as G has forfeited his share in the accumulated profit.
- A's Capital A/c is also credited with $49,000 as A's share of the profit has been reduced by 1/3 due to the admission of K.
- R's Capital A/c is credited with $35,000 as R's share of the profit has not changed.
- K's Capital A/c is credited with $35,000 as she is being admitted to the partnership and acquiring 1/3 of A's share in the profit.

Conclusion:

- The journal entry for accumulated profit on the admission of K involves debiting the Accumulated Profit A/c and crediting the respective capital accounts of G, A, R, and K.
- This entry reflects the distribution of accumulated profit, the forfeiture of G's share, and the admission of K to the partnership.

Similar Commerce Doubts

K, l and M are partners sharing in the ratio of 3:2:1 they admit N for 1/6th share m would reRetain his original Share calculate New profit Sharing ratio 6th Related: Admission of a Partner (Part - 1)?

A and B were partners in a firm who share profits in the ratio of 5:3. C is admitted for 1/10th share of half of which was gifted by A and remaining was taken by c equally from A & B, find the new ratio. Related: Sample Questions - Admission of a Partner?

X and Y are partners in a firm. they admit Z as a new partner for 1/4th share. they have a General reserve of 20000 which they want to continue in the book .pass jornal entry on Z admission.

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