Question : A, B and C are partner sharing profits in the ratio of equally On 1-4-2020 they decided to share the profits 2:4:6. On the date there was a credit balance of Rs 1,00,000 in their Profit and Loss Account and a balance of Rs 2,00,000 in General Reserve Account. Instead of closing the General Reserve Account and Profit and Loss Account, it is decided to record an adjustment entry for the same. In the necessary adjustment entry to give effect to the above arrangement:
Option 1: Dr A by Rs 50,000; Cr. B by Rs 50,000
Option 2: Cr. A by Rs 50,000; Dr B by Rs 50,000
Option 3: Dr A by Rs 50,000; Cr. C by Rs 50,000
Option 4: Cr. A by Rs 50,000; Dr C by Rs 50,000
Correct Answer: Dr A by Rs 50,000; Cr. B by Rs 50,000
Solution : Answer = Cr. A by Rs 50,000; Dr C by Rs 50,000
S.Ratio = old ratio - new ratio
A = 1/3 -1/6 = 2-1/6 = 1/6 x 3,00,000 = 50,000
B = 1/3 - 2/6 = 2-2/6 = 0
C = 1/3 - 3/6 = 2-3/6 = 1/6 x 3,00,000 = 50,000
C's Capital A/c Dr 50,000
To A's Capital A/c - 50,000
Hence, the correct option is 1.
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