CBSE 2025, Set 3

Question

(a) The firm of K, R and M who have been sharing profits in the ratio of 2 : 2 : 1, have existed for some years. M wanted that he should get equal share in the profits with K and R and he further wished that the change in the profit sharing ratio should come into effect retrospectively for the last three years. K and R had agreement for this.
The profits for the last three years were:
2021-22 : ₹ 2,15,000
2022-23 : ₹ 2,24,000
2023-24 : ₹ 3,11,000

Show adjustment of profits by means of a single adjustment journal entry. Show your working clearly.

Edvaya · Accepted Answer

The correct answer is Subjective. **Working Notes (Adjustment Table):** Total Profit for last 3 years = 2,15,000 + 2,24,000 + 3,11,000 = ₹ 7,50,000. | Partners | Dr. Profits (₹) (2:2:1) | Cr. Profits (₹) (1:1:1) | Net Effect Dr. (₹) | Net Effect Cr. (₹) | |---|---|---|---|---| | K | 3,00,000 | 2,50,000 | 50,000 | | | R | 3,00,000 | 2,50,000 | 50,000 | | | M | 1,50,000 | 2,50,000 | | 1,00,000 | | **Total** | **7,50,000** | **7,50,000** | **1,00,000** | **1,00,000** | **Journal Entry (Books of K, R and M):** | Date | Particulars | L.F. | Dr. Amount (₹) | Cr. Amount (₹) | |---|---|---|---|---| | | K's Capital A/c ...Dr. R's Capital A/c ...Dr.     To M's Capital A/c (Adjustment of profit for the last three years on account of change in profit sharing ratio) | | 50,000 50,000 | 1,00,000 |

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Accountancy > Accounting For Partnership Firms > Change In Profit Sharing Ratio

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