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C and d who shared profit equally decided to share future profits in the ratio of 3 : 2 for this purpose asstes and liabilities were revalued as under (building in increase by ₹40000) (furniture and credited will decrease by ₹4000 and ₹ 2000 respectively.)( Unrecorded liability is to be recorded now at ₹6000) (the balance of general reserve was ₹40000 and profit and loss account showed a balance of ₹20000 ) pass the necessary journal entries to record the above.?
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Journal Entries to Record Changes in Profit Sharing Ratio and Revaluation
1. Revaluation of Assets and Liabilities
- Building A/c Dr. ₹40,000
- Furniture A/c Dr. ₹4,000
- Creditor's A/c Cr. ₹2,000
- Unrecorded Liability A/c Dr. ₹6,000
2. Adjustment of Reserves and Profit & Loss Account
- General Reserve A/c Dr. ₹12,000 (₹40,000 x 3/5)
- Profit & Loss A/c Dr. ₹8,000 (₹20,000 x 3/5)
- C A/c Cr. ₹10,000 (₹20,000 x 2/5)
Explanation:
Revaluation of Assets and Liabilities
- The increase in the value of the building is recorded by debiting Building A/c with ₹40,000.
- The decrease in the value of furniture and creditor's balance is recorded by debiting Furniture A/c with ₹4,000 and Creditor's A/c with ₹2,000 respectively.
- The unrecorded liability is recorded by debiting Unrecorded Liability A/c with ₹6,000.
Adjustment of Reserves and Profit & Loss Account
- The existing General Reserve balance of ₹40,000 is divided in the ratio of 3:2, which results in C getting ₹24,000 (₹40,000 x 3/5) and D getting ₹16,000 (₹40,000 x 2/5). Thus, General Reserve A/c is debited with ₹12,000 (C's share) and credited with ₹8,000 (D's share).
- The existing Profit & Loss balance of ₹20,000 is also divided in the ratio of 3:2, which results in C getting ₹12,000 (₹20,000 x 3/5) and D getting ₹8,000 (₹20,000 x 2/5). Thus, Profit & Loss A/c is debited with ₹8,000 (D's share) and credited with ₹12,000 (C's share).
- Finally, the balance of ₹10,000 (C's excess share) is transferred to D's A/c by crediting C A/c with ₹10,000 and debiting D A/c with ₹10,000.
In summary, the above journal entries record the revaluation of assets and liabilities and the adjustment of reserves and profit & loss account to reflect the change in profit sharing ratio.
1. Revaluation of Assets and Liabilities
- Building A/c Dr. ₹40,000
- Furniture A/c Dr. ₹4,000
- Creditor's A/c Cr. ₹2,000
- Unrecorded Liability A/c Dr. ₹6,000
2. Adjustment of Reserves and Profit & Loss Account
- General Reserve A/c Dr. ₹12,000 (₹40,000 x 3/5)
- Profit & Loss A/c Dr. ₹8,000 (₹20,000 x 3/5)
- C A/c Cr. ₹10,000 (₹20,000 x 2/5)
Explanation:
Revaluation of Assets and Liabilities
- The increase in the value of the building is recorded by debiting Building A/c with ₹40,000.
- The decrease in the value of furniture and creditor's balance is recorded by debiting Furniture A/c with ₹4,000 and Creditor's A/c with ₹2,000 respectively.
- The unrecorded liability is recorded by debiting Unrecorded Liability A/c with ₹6,000.
Adjustment of Reserves and Profit & Loss Account
- The existing General Reserve balance of ₹40,000 is divided in the ratio of 3:2, which results in C getting ₹24,000 (₹40,000 x 3/5) and D getting ₹16,000 (₹40,000 x 2/5). Thus, General Reserve A/c is debited with ₹12,000 (C's share) and credited with ₹8,000 (D's share).
- The existing Profit & Loss balance of ₹20,000 is also divided in the ratio of 3:2, which results in C getting ₹12,000 (₹20,000 x 3/5) and D getting ₹8,000 (₹20,000 x 2/5). Thus, Profit & Loss A/c is debited with ₹8,000 (D's share) and credited with ₹12,000 (C's share).
- Finally, the balance of ₹10,000 (C's excess share) is transferred to D's A/c by crediting C A/c with ₹10,000 and debiting D A/c with ₹10,000.
In summary, the above journal entries record the revaluation of assets and liabilities and the adjustment of reserves and profit & loss account to reflect the change in profit sharing ratio.
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C and d who shared profit equally decided to share future profits in the ratio of 3 : 2 for this purpose asstes and liabilities were revalued as under (building in increase by ₹40000) (furniture and credited will decrease by ₹4000 and ₹ 2000 respectively.)( Unrecorded liability is to be recorded now at ₹6000) (the balance of general reserve was ₹40000 and profit and loss account showed a balance of ₹20000 ) pass the necessary journal entries to record the above.?
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C and d who shared profit equally decided to share future profits in the ratio of 3 : 2 for this purpose asstes and liabilities were revalued as under (building in increase by ₹40000) (furniture and credited will decrease by ₹4000 and ₹ 2000 respectively.)( Unrecorded liability is to be recorded now at ₹6000) (the balance of general reserve was ₹40000 and profit and loss account showed a balance of ₹20000 ) pass the necessary journal entries to record the above.? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about C and d who shared profit equally decided to share future profits in the ratio of 3 : 2 for this purpose asstes and liabilities were revalued as under (building in increase by ₹40000) (furniture and credited will decrease by ₹4000 and ₹ 2000 respectively.)( Unrecorded liability is to be recorded now at ₹6000) (the balance of general reserve was ₹40000 and profit and loss account showed a balance of ₹20000 ) pass the necessary journal entries to record the above.? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for C and d who shared profit equally decided to share future profits in the ratio of 3 : 2 for this purpose asstes and liabilities were revalued as under (building in increase by ₹40000) (furniture and credited will decrease by ₹4000 and ₹ 2000 respectively.)( Unrecorded liability is to be recorded now at ₹6000) (the balance of general reserve was ₹40000 and profit and loss account showed a balance of ₹20000 ) pass the necessary journal entries to record the above.?.
C and d who shared profit equally decided to share future profits in the ratio of 3 : 2 for this purpose asstes and liabilities were revalued as under (building in increase by ₹40000) (furniture and credited will decrease by ₹4000 and ₹ 2000 respectively.)( Unrecorded liability is to be recorded now at ₹6000) (the balance of general reserve was ₹40000 and profit and loss account showed a balance of ₹20000 ) pass the necessary journal entries to record the above.? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about C and d who shared profit equally decided to share future profits in the ratio of 3 : 2 for this purpose asstes and liabilities were revalued as under (building in increase by ₹40000) (furniture and credited will decrease by ₹4000 and ₹ 2000 respectively.)( Unrecorded liability is to be recorded now at ₹6000) (the balance of general reserve was ₹40000 and profit and loss account showed a balance of ₹20000 ) pass the necessary journal entries to record the above.? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for C and d who shared profit equally decided to share future profits in the ratio of 3 : 2 for this purpose asstes and liabilities were revalued as under (building in increase by ₹40000) (furniture and credited will decrease by ₹4000 and ₹ 2000 respectively.)( Unrecorded liability is to be recorded now at ₹6000) (the balance of general reserve was ₹40000 and profit and loss account showed a balance of ₹20000 ) pass the necessary journal entries to record the above.?.
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