PART A : Chapter 4

CHANGE IN PROFIT SHARING RATIO AMONG EXISTING PARTNERS :

1) What adjustments are required when existing partners decide to change their profit
sharing ratio? (1)

2) X, Y and Z are partners sharing profits in the ratio of 5:3:2. Calculate the new profit
sharing ratio and the sacrificing ratio, if Z acquires 1/5th share from X. (1)

3) Atul and ankur are partners sharing profits and losses in the ratio of ¾ and ¼. They
decided to share future profits and losses in the ratio of 1:1. Compute the sacrifice and
gain of the partners. (1)

4) Saket, Sakshaya and Sanaya were sharing profits in the ratio of 2:1:1. Now they want to
change their profit sharing ratio. Saket agreed to sacrifice ½ of his share in favour of
Sakshaya and Sanaya in the ratio of 3:1. Compute their new profit sharing ratio. (1)

5) Sohan and Ram are partners sharing profits and losses in the ratio of 3:1. Their capitals
were ₹ 60,000 and ₹ 40,000 respectively. As from 1st April 2017, 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:
₹
2012 – 13 30,000
2013 – 14 40,000
2014 – 15 50,000
2015 – 16 60,000
2016 - 17 70,000
Pass necessary journal entry to give effect to the above arrangement. (3)

6) X, Y and Z are partners sharing profits and losses in the ratio of 5:3:2. They decided to
share future profits and losses in the ratio of 2:3:5 with effect from 1st April, 2017.
Following items appear in the Balance Sheet as at 31st March, 2017.
General Reserve ₹ 75,000; Advertisement Suspense A/c ₹ 50,000; Contingency Reserve
₹ 12,500 and Profit and Loss A/c (Cr) ₹ 37,500. Pass Journal entries:
(a) When these accounts are transferred to their capital A/cs.
(b) When these accounts are not to be transferred to their capital A/cs, instead record an
adjustment entry for the same. (3)

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 7) A and B were sharing profits in the ratio of 3:2. They decided to change their profit
sharing ratio to 2:3. At the time of this decision there was a General Reserve of ₹ 15,000.
The assets and liabilities were revalued as under:
 Building was appreciated by ₹ 6,000.
 Furniture was depreciated by ₹ 5,000.
 Debtors were ₹ 20,000 and a Provision for Doubtful Debts was made @ 5%.
 A provision for ₹ 1,500 was made for an outstanding bill of repair.
 Unrecorded typewriter of ₹ 200 to be taken into account.
 Creditors of ₹ 800 are not likely to claim their amount.
Pass necessary Journal entries and prepare Revaluation Account. (4)

8) Shobha, Vishal, Gautam and Tisha are partners in a firm, sharing profits and losses in the
ratio of 4:2:4:2. Goodwill already appears in the books at ₹ 60,000.With effect from 1st
April, 2017 they agreed to share profits equally. For this purpose the goodwill of the firm
is valued at two years’ purchase of average profits of last three years which were ₹
55,000; ₹ 35,000 and ₹ 90,000 respectively. Give necessary Journal entries. (4)
9)

(4)
10) The Balance Sheet of Pawan and Sameer, who share profits and losses as 5:3,as at 1st
April, 2017 is :
Liabilities ₹ Assets ₹
Pawan 52,000 Goodwill 8,000
Sameer 54,000 Machinery 38,000
General Reserve 4,800 Furniture 15,000
Sundry creditors 5,000 Sundry Debtors 33,000
Employees Provident Fund 1,000 Stock 7,000
Workmen’s compensation 10,000 Bank 25,000
reserve Advertisement Suspense 800
1,26,800 1,26,800
On the above date, they decided to change their profit sharing ratio to 3:5 and agreed upon:
(a) Goodwill is valued at ₹ 12,000.
(b) Machinery and Stock be valued at ₹ 45,000 and ₹ 8,000 respectively.
(c) Claim on account of workmen compensation is ₹ 6,000.
Prepare Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of the
new Firm. (8) (6)

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 (6)
12) Sonu, Monu and Tonu are partners in a firm sharing profits and losses in the ratio of 2:2:1.
Their Balance Sheet as at 31st March,2017 was:
Liabilities ₹ Assets ₹
Creditors 30,000 Land 85,000
Bills Payable 1,20,000 Building 50,000
Outstanding Expenses 25,000 Plant and Machinery 1,00.000
General Reserve 50,000 Stock 40,000
Capital A/cs: Debtors 1,25,000
Sonu 1,50,000 Cash in hand 1,05,000
Monu 1,60,000 Cash at Bank 2,00,000
Tonu 1,70,000
7,05,000 7,05,000
From 1st April , 2017 the partners decided to share profits in the ratio of 1:2:3. For this purpose it
was agreed that:
(i) The Goodwill of the firm should be valued at ₹ 60,000.
(ii) Land should be revalued at ₹ 1,00,000 and Building should be depreciated by 6%.
(iii) Creditors amounting to ₹ 3,000 were not to be paid.
You are required to pass necessary Journal entries to give effect to the above stated agreement
without opening the Revaluation Account. Also prepare Capital Accounts of the Partners and the
Balance Sheet of the reconstituted firm. (8) (6)

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13)

(8) (6)
14)

(6)

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