Pawan, Iqbal and Rick are partners sharing profits in the ratio of 2 : 2 : 1. From 1st April, 2016, they decided to share profits in the ratio of 1 : 2 : 2. On that date, following balances appeared in the balance sheet. Profit and loss (debit balance Rs 40,000); general reserve Rs 1,40,000; deferred revenue expenditure Rs 20,000.
Pass adjusting journal entry when these reserves will appear in the books of the reconstituted firm.
Dear Student,
Notes:
$Calculationofsacrificeorgain\phantom{\rule{0ex}{0ex}}Pawan=\frac{2}{5}\frac{1}{5}=\frac{1}{5}\left(sacrifice\right)\phantom{\rule{0ex}{0ex}}Iqbaal=\frac{2}{5}\frac{2}{5}=0\phantom{\rule{0ex}{0ex}}Rick=\frac{1}{5}\frac{2}{5}=\frac{1}{5}\left(gain\right)\phantom{\rule{0ex}{0ex}}Totalamounttobeadjusted=GeneralreserveP/L\left(Dr.\right)Deferredrevenueexpenditure\phantom{\rule{0ex}{0ex}}=1,40,00040,00020,000=Rs.80,000\phantom{\rule{0ex}{0ex}}PawanandRick\text{'}sshare=80,000\times \frac{1}{5}=Rs.16,000$
Regards
Journal  
Particulars  L.F.  Debit Amount Rs 
Credit Amount Rs 

Rick’ s Capital A/c  Dr.  16,000  
To Pawan’s Capital A/c  16,000  
(Adjustment entry made)  
Notes:
$Calculationofsacrificeorgain\phantom{\rule{0ex}{0ex}}Pawan=\frac{2}{5}\frac{1}{5}=\frac{1}{5}\left(sacrifice\right)\phantom{\rule{0ex}{0ex}}Iqbaal=\frac{2}{5}\frac{2}{5}=0\phantom{\rule{0ex}{0ex}}Rick=\frac{1}{5}\frac{2}{5}=\frac{1}{5}\left(gain\right)\phantom{\rule{0ex}{0ex}}Totalamounttobeadjusted=GeneralreserveP/L\left(Dr.\right)Deferredrevenueexpenditure\phantom{\rule{0ex}{0ex}}=1,40,00040,00020,000=Rs.80,000\phantom{\rule{0ex}{0ex}}PawanandRick\text{'}sshare=80,000\times \frac{1}{5}=Rs.16,000$
Regards