ACCOUNTANCY CLASS XII

CHANGE IN PROFIT SHARING RATIO

1. Alok, Anuj and Satish are partners sharing profits in the ratio of 5:3:2. It was decided that in future they will
share profits in the ratio of 1:1:1. An extract of their Balance Sheet as at 31st March 2023 is:
Liabilities Rs Assets Rs
Investment Fluctuation 30,000 Current Investment 2,00,000
Reserve
Case 1: Show the treatment, when there is no other information regarding investment and reserve.
Case 2: Investment revalued at Rs.2,40,000
Case 3: Investment revalued at Rs. 2,00,000
Case 4: Investment revalued at Rs. 1,80,000
Case 5: Investment revalued at Rs. 1,50,000
2. Ipshita, Sunita and Simran are partners sharing profits in the ratio of 3:2:1. They decided to share future profits
in the ratio of 1:1:1 with effect from 1st April, 2021. Show the accounting treatment of Workmen compensation
Reserve at the time of change in profit sharing ratio of the partners. An extract of their Balance Sheet as at 31st
March 2021 is given below:
Liabilities Rs Assets Rs
Workmen Compensation 60,000
Reserve
Case 1: When there is no claim against the workmen compensation reserve and no other information is
mentioned in the question regarding this reserve.
Case 2: When there is no claim against the workmen compensation reserve and it was decided by the partners to
continue with this reserve.
Case 3: Claim for workmen compensation was Rs.48,000. Unutilised part of this reserve is to be distributed by
the partners.
Case 4: Claim for workmen compensation was Rs.48,000 and partners have decided to continue with the
remaining reserve without distributing it.
Case 5: Claim for workmen compensation was Rs.75,000.
Case 6: Claim for workmen compensation was Rs.60,000.
3.
4. Rani, Sonu and Mohan were partners sharing profits in the equal ratio. They have decided to share the profits in
the ratio of 5:3:2 with retrospective effect. Calculate the Sacrifice or Gain of the partners.
5. Bitu, Bubu and Mayank were sharing profits and losses equally. It was decided that Mayank will get 1/4th share
in profit. Calculate new profit sharing ratio and sacrifice/gain of the partners
6. A, B and C are partners sharing profits in the ratio of 3: 3:2. They have decided to share profits equally. On that
date profits for the last 3 years shown by the firm were:
2019 Rs15,000
2020 Rs18,000
2021 Rs12,000
Goodwill is to be calculated at 2 years purchase of Average profits of last 3 years. The goodwill already existing in
the books Rs 8,000. Give the necessary Adjustment entry.
7. A,B and C were partners in a firm sharing profit in the ratio of 5:3:2. They have decided to share profits equally
with effect from 1 April, 2020. On that date the profit and loss account showed a credit balance of Rs15,000.

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 Instead of closing the Profit and Loss account, it was decided by the partners to make an adjusting entry to show
the change in profit sharing ratio. Give the necessary Adjustment entry to record this effect.
8. Vicky , Rohit and Lucky were partners sharing profits equally. They have decided to share the profits in the ratio
of 3 :2:1. On that date the Balance Sheet of the firm is showing a General Reserve of Rs18,000. Record the
necessary Adjustment entries in the following cases:
(i) When they distribute the General Reserve
(ii) When they do not want to distribute the General Reserve
9. Sanu, Soumay and Ronit are partners in a firm sharing profit in 1:2:3 ratio. Their balance sheet as at 31st March
2020 showed a balance of Rs48,000 in General Reserve. From 1 April 2020, they will share profits equally.
Record the necessary Adjustment entry to give effect to the above arrangement when partners decide not to
close the General Reserve Account.
10. Vinod, Yuvraj and Himesh were sharing profits and losses in the ratio of 5:3: 2 and their capitals were fixed. They
decided to share future profits and losses in the ratio of 2:3: 5 with effect from 1st April, 2021. They decided to
record the effect of the following, without affecting their book values:
(i) General Reserve Rs20,000
(ii) Advertisement Suspense Rs50,000
Give necessary adjustment entry.
11. A, B, C, and D are partners in firm sharing profits and losses in the ratio of 2:2:1:1. They decided to
share profits in future in the ratio of 4:3:2:1. For this purpose goodwill of the firm was valued at
Rs1,80,000. There was also a reserve of Rs60,000 in the books of the firm.
Find out the sacrifice and gaining ratio and pass necessary journal entry assuming that partners do not
want to distribute the reserve
12. A and B are sharing profits and losses equally. With effect from 1st April, 2021, they agree to share profits in the
ratio of 4: 3. Calculate individual partner's gain or sacrifice due to the change in ratio.
13. AB and C shared profits and losses in the ratio of 3:2 respectively. With effect from 1st April, 2021, they agreed to
share profits equally. The goodwill of the firm was valued at 18,000. Pass necessary Journal entries when
(a) Goodwill Account is not opened, and
(b) Goodwill Account is opened
14. Mandeep Vinod and Ajay are partners sharing profits and losses in the ratio of 3:2:1. From 1st April, 2021, they
decided to share profits and losses equally. The Partnership Deed provides that in the event of any change in the
profit-sharing ratio, the goodwill shall be valued at three years purchase of the average profit of last five years
The profits and losses of the past five years are
Profit-Year ended 31st March, 2017-Rs 1,00,000, 2018-Rs 1,50.000 2020-Rs 2,00,000. 2021-Rs 200,000,
Loss-Year ended 31st March 2019-Rs50.000
Pass the journal entries showing the working
15. X.Y and Z are partners sharing profits and losses in the ratio of 5:3 :2, decided to share future profits and losses
equally with effect from 1st April, 2021. On that date, the goodwill appeared in the books at Rs 12,000. But it was
revalued at Rs 30,000 Pass journal entries assuming that goodwill will not appear in the books of account
16. Jai and Raj are partners sharing profits in the ratio of 3:2 With effect from 1st April, 2021 they decided to share
profits equally, Goodwill appeared in the books at Rs25.000 As on 1st April, 2021, it was valued at Rs 1,00,000.
They decided to carry goodwill in the books of the firm Pass the journal entry giving effect to the above
17. X and Y are partners in a firm sharing profits and losses in the ratio of 3:2. With effect from 1st April, 2021, they
decided to share future profits equally. On the date of change in the profit-sharing ratio, the Profit and Loss

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 Account showed a credit balance of Rs1,50,000, Record the necessary journal entry for the distribution of the
balance in the Profit and Loss Account immediately before the change in the profit-sharing ratio
18. A,B and C who are presently sharing profits and losses in the ratio of 5:3:2 decide to share future profits and
losses in the ratio of 2:3:5 Give the journal entry to distribute Workmen Compensation Reserve ofRs 1,20,000 at
the time of change in profit-sharing ratio, when
(a)no information is given
(b)there is no claim against it
19. A B and C are partners sharing profits and losses in the ratio of 5:4:1. Calculate new profit-sharing ratio,
sacrificing ratio and gaining ratio in each of the following cases:
Case: 1 C acquires 1/5th share from A
Case :2 C acquires 1/5th share equally form A and B
Case :3. A, B and C will share future profits and losses equally
Case 4 :C acquires 1/10th share of A and 1/2 share of B
20. X,Y and Z are sharing profits and losses in the ratio of 5:3:2 With effect from 1st April, 2021, they decide to share
profits and losses in the ratio of 5 :2:3 Calculate each Partner's gain or sacrifice due to the change in ratio
21. Charu and Divya are partners in a firm. Charu was to get a commission of 10% on the net profits before
charging any commission. However, Divya was to get a commission of 10% on the net profits after
charging all commissions. Fill in the missing figure in the following Profit and Loss Appropriation
Account of the year ended 31st March 2021
22. The total capital of the firm do Saurabh, Mohit and Nikhil was Rs1,00,000. The net profits for the last 3
years were: 2018-19 Rs40,000; 2014-15 Rs46,000 and 2015-16 Rs52,000. There was an abnormal loss
of Rs3,000 in 2019-20. Goodwill of the firm was to be valued at 2 years purchase of the average profits
of the last three years. Calculate the goodwill of the firm.
23. Following is the Balance Sheet of X, Y and Z, who share profits and losses in the ratio of 2 : 3 : 1 as at
31st March, 2018:
BALANCE SHEET
Liabilities Rs Assets Rs
X’s Capital A/c 1,00,000 Goodwill 12,000
Y’s Capital A/c 2,00,000 Land and Building 3,50,000
Z’s Capital A/c 3,00,000 Investments (Market 1,00,000
Value Rs 96,000)
Workmen 30,000 Stock 80,000
Compensation Reserve
Investments 10,000 Debtors 3,00,000
Fluctuation Reserve
Creditors 5,00,000 Less: Provision for 2,90,000
Doubtful Debts 10,000
Cash at Bank 2,96,000
Advertisement 12,000
Suspense A/c
11,40,000 11,40,000

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 The partners changed their profit-sharing ratio to 3 : 2 : 1 w.e.f. 1st April, 2021. The following terms are
agreed upon:
(i) Goodwill is to be valued at two years’ purchase of average profit of last three completed years. The
profits were:
2018–19—Rs 45,000; 2019–20—Rs 90,000; 2020–21—Rs 1,35,000.
(ii) Land and Building was found undervalued by Rs 25,000 and Stock was found overvalued by Rs 8,000.
(iii) Provision for Doubtful Debts is to be made equal to 5% of the Debtors.
(iv) Claim on account of Workmen Compensation is Rs 18,000.
Prepare Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of the new firm.
24. A, B and C are partners sharing profits in the ratio of 3 : 2 : 1. On 1st April, 2021, they decided to share
the profits equally. On that date, there was a credit balance of Rs 1,20,000 in their Profit and Loss
Account and Rs 60,000 in the General Reserve. Pass necessary Journal entry in the books of the firm.
25. The Balance Sheet of Anita, Ankita and Amrit who are sharing profits in the ratio of 2:3:1,as at 31st March , 2019
is given below: []
Liabilities Rs Assets Rs
Anita’s Capital 1,00,000 Goodwill 12,000
Ankita’s Capital 2,00,000 Land and Building 2,50,000
Amrit ‘s Capital 3,00,000 Investments 50,000
[Market Value Rs46,000]
Workmen Compensation 20,000 Stock 80,000
Reserve
Investment Fluctuation 10,000 Debtors 3,00,000
Reserve
Provision for Doubtful 10,000 Bank 2,96,000
Debts
Sundry Creditors 3,00,000 Advertisement Suspense A/c 12,000
Employees’ Provident Fund 60,000
10,00,000 10,00,000
Anita, Ankita and Amrit decide to alter their profits sharing ratio as 3:2:1 from 1st April , 2019.
(a)Goodwill is to be valued at 2 years’ purchase of average profits of last three completed years. The profits were
–Year I Rs48,000 , Year II Rs93,000 , Year III Rs1,38,000
(b) Land and Building was found undervalued by Rs20,000, and Stock was found overvalued by Rs38,000.
(c)Provision for doubtful debts is to be made equal to 5% of the debtors.
(d)Claim on account of workmen compensation is Rs8,000.
(e)10% of the sundry creditors be written back as no longer payable.
(f)Out of the amount of insurance which was debited entirely to P&L A/c , Rs 5,000be carried forward as an
unexpired insurance .
Required: Pass the necessary journal entries and prepare the necessary ledger accounts and the Balance Sheet .
26. Sohan and Ram are partners sharing profits and losses in the ratio of 3 : 1. Their capitals were Rs
60,000 and Rs 40,000 respectively. From 1st April, 2022, it was agreed to change the profit-sharing
ratio to 3 : 2. According to the Partnership Deed, goodwill is to be valued at three years’ purchase of the
average of five years’ profits. The profits of the previous five years were: 2017–18—Rs 30,000; 2018–
19—Rs 40,000; 2019–20—Rs 50,000; 2020–21—Rs 60,000 and 2021–22 —Rs 70,000 respectively.
Pass necessary Journal entry to give effect to the above arrangement through Capital Accounts.

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27. Bobby,Ankur and Mona are partners in a firm sharing profits in the ratio of 2:2:1 . Their Balance Sheet as at
March 31,2019 was as follows :
Liabilities Rs Assets Rs
Creditors 30,000 Land 30,000
Bills payable 15,000 Building 30,000
Bobby’s capital 60,000 Plant 60,000
Ankur’s capital 30,000 Stock 30,000
Mona’s Capital 15,000 Debtors 9,000
General Reserve 12,000 Cash 3,000
1,62,000 1,62,000
Bobby , Ankur and Mona decided to share the profit equally , w.e.f April 1, 2019. For this purpose it was agreed
that:
(i) The goodwill of the firm should be valued at Rs18,000.
(ii) Land Should be revalued at Rs48,000 and building should be depreciated by 6%
(iii) Creditors amounting to Rs1,8000 were not likely to be claimed and hence should be written off.
You are required to_:
(a) Record the necessary journal entries to give effect to the above agreement , without opening Revaluation
Account;
(b)Prepare the Capital Accounts of the partners,; and
(c)Prepare the Balance Sheet of the firm after reconstitution . [6]
28. X, Y and Z are partners sharing profits and losses in the ratio of 5:3:2. They decide to share future profits and
losses in the ratio of 2:3:5 . Their capitals remaining after adjustments relating to goodwill , profit/ loss on
revaluation and accumulated profits, losses & reserves are Rs59,000, Rs30,000 and Rs11,000 respectively. They
also decide that their capitals should also be in their new profit sharing ratio.
Required: calculate the amount of actual cash to be paid off or brought in by the old partners for this adjustment
and pass the necessary journal entries. [4]
29. Bubu , Rishi and Samir who are presently sharing profits & losses in the ratio of 5:3:2, decide to share future
profits & losses in the ratio of 2:3:5 with effect from 1st April , 2019 . An extract of their Balance Sheet as at 31st
March , 2019 is as follows
Liabilities Rs Assets Rs
Sundry Creditors 3,00,000 Land & Building 2,50,000
Outstanding Rent 10,000 Plant & Machinery 1,00,000
Stock 80,000
Debtors 3,00,000
Less: Provision 10,000 2,90,000
It is decided that:
(a)Land & Building be valued at Rs2,85,000.
(b)Plant & Machinery be depreciated by 15%.
(c)Stock is found overvalued by Rs38,000.
(d)Provision for doubtful debts is to be made equal to 5% of the debtors.
(e)An item of Rs30,000 included in sundry creditors is not likely to be claimed.
(f)Rent of Rs4,000 still Outstanding
(g)Out of the amount of insurance which was debited entirely to P & L A/c , Rs5,000 be carried forward as an
unexpired insurance.

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 (h) Out of total commission received Rs3,000 is to be treated as advance commission. This amount was earlier
credited to Profit & Loss account.
(i) An unaccounted accrued income of Rs1,000 be provided for.
(j)A debtor whose dues of Rs5,000 were written off as bad debts paid 80% in full settlement.
Required : Pass the necessary Journal Entries and Prepare Revaluation Account. [6]
30. Mandeep, Vinod and Abbas are partners sharing profits in the ratio of 3 : 2 : 1 respectively . From 1st April, 2018,
they decided to share profits in the ratio of 2:3:1. The Partnership Deed provides that in the event of any change
in profit-sharing ratio, the goodwill shall be valued at three years' purchase of the average profit of five years
Profits . The profits and losses of the preceding five years are:
Profit——I——Rs 1,20,000; II——Rs 3,00,000; III——Rs3,40,000; IV——Rs3,80,000
Loss——V——Rs 1,40,000.
Pass the necessary journal entry to record the above change
31. X, Y and Z are partners sharing profits in the ratio of 3 : 2 : 1. From 1st April, 2021, Y decided to devote
only part of time to the business and accepted to receive one half of his previous share of profits.
Sacrificed share of Y is taken equally by X and Z. For this purpose, goodwill of the firm was valued at
3,00,000. Calculate new profit-sharing ratio and pass an adjustment entry for treatment of goodwill due
to change in the profit-sharing ratio.
32. Ashish, Aakash and Akhil are partners sharing profits in the ratio of 5 : 3 : 2. They decided to share
profits in future in the ratio of 2 : 2 : 1 w.e.f. 1st April, 2021. Calculate the Sacrificing and Gaining Ratio.
33. X, Y and Z are partners sharing profits in the ratio of 2 : 2 : 1. Their Balance Sheet as at 31st March,
2018 stood as follows:
Liabilities Rs Assets Rs
Sundry Creditors 1,20,000 Cash in Hand 55,000
Outstanding Expenses 15,000 Cash at Bank 2,10,000
General Reserve 75,000 Bills Receivable 20,000
Profit and Loss A/c 50,000 Sundry Debtors 1,10,000
Capital A/cs: Less: Provision for Doubtful 1,00,000
Debts 10,000
X 3,00,000 Stock 2,00,000
Y 2,80,000 Machinery 3,50,000
Z 2,20,000 8,00,000 Computers 1,00,000
Furniture 25,000
10,60,000 10,60,000
The partners agreed to share profits w.e.f. 1st April, 2021 in the ratio of 5 : 3 : 2. They also agreed to the
following:
(i) Value of stock be increased to Rs 2,25,000.
(ii) Provision for Doubtful Debts be written back, all debtors being good.
(iii) Value of Machinery be reduced by 5%.
(iv) Value of Computers be reduced to Rs 82,500.
(v) Goodwill of the firm for the purpose was valued at Rs 1,00,000.
Pass an adjustment entry giving effect to the above arrangement and prepare Balance Sheet of the firm
after adjustments when:

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 (i) The partners decide to carry the assets and liabilities at their revised values and General Reserve and
Profit and Loss Account at their existing values.
(ii) The partners decide to carry assets and liabilities including General Reserve and Profit and Loss
Account at their existing values by passing a single adjustment entry.
34. Vinod, Vikram and Arvind were partners in a firm sharing profits and losses in the ratio of 2:3:1.With
Effect From 1st April 2021 they decided to share future profits in the ratio of 3:2:1. On that date their
Balance Sheet showed a debit balance of Rs.8,000 in Profit and Loss Account and a balance of Rs.30,000
in General Reserve.
It was also agreed that:
(a)The goodwill of the firm be valued at Rs.60,000.
(b)The Land (having book value of Rs.2,00,000) will be valued at Rs.2,90,000.
Give entries for the above changes.
35. Vijay, Rohit and Suraj are partners in a firm Sharing profits in the rat"' of 3 : 2:1 , Suraj wants that he
should share profits of the firm equally in future, He further wants that change in profit sharing ratio
should be applicable retrospectively, for the last three years. Other partners have no objection to this.
The profits for the last three years were Rs 3,00,000; Rs 2,35,000 and Rs 2,75,000.
Record the adjustment by means of Journal entry. Give workings,
36. Ram, Shyam and Mohan were partners in a firm sharing profits in the ratio of 5:3: 2, On 1st April. 2021
they decided to share profits equally .It was also agreed that the change be carried out retrospectively
for the last 4 years. The profits for the last 5 were as follows:

Year ended Profit (Rs)

2017 2,50,000
2018 2,00,000
2019 1,00,000(Loss)
2020 3,00,000
2021 5,00,000
Pass necessary adjustment entry.
37. A.,B and C were partners in a firm. They had no partnership deed. They have been in business for 4
years and loss for this period was .
Year ended Profit (Rs)
st
31 March 2017 39,000
st
31 March 2018 54,000
st
31 March 2019 18,000(loss)
st
31 March 2020 75,000
During the year 2020-21 , they agreed to share profits and losses in the ratio of 2 : 2 :1 with
retrospective effect from the year 2016-17. It was also decided that an Interest (charge) of 5 % p.a. was
to be provided on capitals (fixed). were Rs 80,000, Rs 60,000 and Rs 60,000 respectively.
Pass necessary adjustment entry.

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38. A, B, C, and D are partners in firm sharing profits and losses in the ratio of 2:2:1:1. They decided to
share profits in future in the ratio of 4:3:2:1. For this purpose goodwill of the firm was valued at
Rs1,80,000. There was also a reserve of Rs60,000 in the books of the firm.
Find out the sacrifice and gaining ratio and pass necessary journal entry assuming that partners do not
want to distribute the reserve.
39. A, B and C are partners sharing profits and losses in the ratio of 5 : 4 : 1. Calculate new profit-sharing
ratio, sacrificing ratio and gaining ratio in each of the following cases:
Case 1. C acquires 1/5th share from A.
Case 2. C acquires 1/5th share equally form A and B.
Case 3. A, B and C will share future profits and losses equally.
Case 4. C acquires 1/10th share of A and 1/2 share of B.
40. A and B are partners in a firm sharing profits in the ratio of 2 : 1 . They decided with effect from 1st
April, 2017, that they would share profits in the ratio of 3 : 2 . But, this decision was taken after the
profit for the year 2019-20 amounting to Rs 90,000 was distributed in the old ratio.
Value of firm's goodwill was estimated on the basis of aggregate of two years' profits preceding the date
decision became effective .
The profits for 2017-18 and 2018-19 were Rs 60,000 and Rs 75,000 respectively. It was decided that
Goodwill Account will not be opened in the books of the firm and necessary adjustment be made
through Capital Accounts which, on 31st March, 2020 stood, at Rs 1,50,000 for A and Rs 90,000 for B.
Pass necessary journal entries and prepare Capital Accounts.
41. Jai and Raj are partners sharing profits in the ratio of 3 : 2 . With effect from 1st April, 2021, they
decided to share profits equally. Goodwill appeared in the books at Rs 25,000 . As on 1st April, 2021, it
was valued at Rs 1,00,000 . They decided to carry goodwill in the books of the firm.
Pass the journal entry giving effect to the above.
42. X, Y are partners sharing profits in the ratio of 2 : 1 . On 31st March, 2021, their Balance Sheet showed
General Reserve of Rs 60,000. It was decided that in future they will share profits and losses in the
ratio of 3 : 2 . Pass necessary journal entry in each of the following alternative cases :
(i) If General Reserve is not to be shown in the new Balance Sheet .
(ii) If General Reserve is to be shown in the new Balance Sheet .

43. Vicky, Rocky and Sandy are partners sharing profits and losses in the ratio of 3:3:2. Their balance sheet
as on 31st March, 2023 was as follows:
Liabilities Rs Assets Rs
Liabilities Land and Building 1,00,000
Capitals: Furniture 79,500
Vicky 1,00,000 Stock 60,000
Rocky 1,00,000 Sundry Debtors 25,000
Sandy 50,000 2,50,000 Bank Balance 13,500
Profit and Loss A/c 18,000 Preliminary Expense 2,000
Sundry Creditors 12,000

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 2,80,000 2,80,000
Partners have decided to share profits and losses in the ratio of 4:3:2 w.e.f 1st April 2023. It was found
that:
(i) Furniture to be revalued at Rs 65,000.
(ii) Land and Building was found undervalued by 20%.
(iii) Value of Stock to be reduced to Rs 55,000.
(iv) Provision for doubtful debts is to be made on debtors @10%.
(v) A liability of Rs 4,000 included in Sundry Creditors is not likely to be paid.
It was decided by the partners that revalued assets and liabilities are to be recorded in the books. They
have also decided to distribute the profit and loss (given in the balance sheet) before bringing the new
profit sharing ratio into force.
You are required to give the necessary Adjustment entries, revaluation account, capital accounts of
partners and Balance Sheet of the reconstituted firm.
44. Harsh and Rupali are partners in a firm sharing profits and losses in the ratio of 3:1. They decided to
share profits equally from Jan 1, 2015. Their Balance Sheet as at 31 December, 2014 was as under:
Liabilities Rs Assets Rs
Creditors 1,30,000 Building 50,000
General Reserve 30,000 Machinery 53,000
Workmen 10,000 Debtors 40,000
Compensation Reserve
Capital A/cs: Bill Receivable 40,000
Harsh 50,000 Cash in hand 77,000
Rupali 40,000 90,000
2,60,000 2,60,000
It was agreed that on above data:
(i) The Goodwill of the firm 80,000
(ii) Value of Building be increased to Rs 70,000
(iii) The value of Machinery be appreciated by Rs 40,000
(iv) A provision for doubtful debts is to be made on Debtors @ 5%.
(v) A liability for Rs 2,000 included in Sundry Creditors is not likely to rise.
Partners agreed that revised value of Assets and Liabilities are to be recorded in the books. Pass
necessary journal entries, prepare Revaluation A/c, Partners' Capital Account and opening Balance
Sheet of the reconstituted firm.
45. Sonu, Sumit and Sahil are partners sharing profits and losses in the ratio of 5:3:2. Their Balance Sheet as
at 31st December, 2022 was as follows:
Liabilities Rs Assets Rs
Sundry Creditors 50,000 Cash at Bank 25,000
Capital A/cs: Sundry Debtors 50,000
Sonu 2,00,000 Stock 75,000
Sumit 80,000 Machinery 1,00,000
Sahil 70,000 3,50,000 Building 1,50,000

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 4,00,000 4,00,000
Partners decided that with effect from 1st January, 2023, they would share profits and losses in the
ratio of 3:2:1. It was agreed that:
(a) Stock be valued at Rs 70,000
(b) Machinery to be depreciated by 20%
(c) A provision for doubtful debts be made on debtors @ 5%.
(d) Building to be appreciated by 15%
(e) A liability for Rs 9,500 included in Sundry Creditors it not likely to arise.
(f) Goodwill of the firm is to be valued at Rs 90,000.
Partners agreed that the revised values of assets and liabilities are not to be recorded in the books. You
are required to record the change by passing a single journal entry with necessary working note. Also
prepare the revised Balance-Sheet.
46. X, Y, and Z sharing profits and losses in the ratio 1:2:2, decided to share future profits equally with
effect from 1st April 2020. On that date, the Profit and Loss Account showed a credit balance of
Rs1,20,000. Partners do not want to distribute the profit but prefer to record the change in the profit-
sharing ratio by passing an adjustment entry. You are required to give the adjusting entry

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