CBSE 2025, Set 2

Question

Kavi, Naitik and Om were partners in a firm sharing profits in the ratio of 5:3:2. With effect from 1st April, 2024, they decided to share profits equally. On that date, Workmen Compensation Reserve appeared in the books at ₹ 60,000 and the claim on account of workmen compensation was estimated at ₹ 80,000. In the necessary journal entries to record the above, partners' capital accounts will be: A). Credited by ₹ 10,000; ₹ 6,000 and ₹ 4,000 respectively. B). Debited by ₹ 10,000; ₹ 6,000 and ₹ 4,000 respectively. C). Debited by ₹ 4,000; ₹ 6,000 and ₹ 10,000 respectively. D). Credited by ₹ 4,000; ₹ 6,000 and ₹ 10,000 respectively.

Edvaya · Accepted Answer

The correct answer is Debited by ₹ 10,000; ₹ 6,000 and ₹ 4,000 respectively.. (B) Debited by ₹ 10,000; ₹ 6,000 and ₹ 4,000 respectively. **Explanation:** The claim (₹ 80,000) exceeds the reserve (₹ 60,000) by ₹ 20,000. This shortfall of ₹ 20,000 is transferred to the debit of Revaluation A/c as a loss. This loss is then distributed among the partners in their old profit sharing ratio (5:3:2), meaning their capital accounts will be debited by ₹ 10,000 (Kavi), ₹ 6,000 (Naitik), and ₹ 4,000 (Om).

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

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