Question : Aman and Varun are partners sharing profits in the ratio of equally. Their Balance Sheet showed a balance of Rs 62,000 in the General Reserve Account and a debit balance of 20,000 in the Profit and Loss Account. They now decided to share the future profits 4:3. Instead of closing the General Reserve Account and Profit and Loss Account, it is decided to pass an adjustment entry for the same. In adjustment entry :
Option 1: Dr. Aman by Rs 3,000; Cr. Varun by Rs 3,000
Option 2: Dr. Aman by Rs 5,000; Cr. Varun by Rs 5,000
Option 3: Cr. Aman by Rs 5,000; Dr. Varun by Rs 5,000
Option 4: Cr. Aman by Rs 3,000; Dr. Varun by Rs 3,000
Correct Answer: Dr. Aman by Rs 3,000; Cr. Varun by Rs 3,000
Solution : Answer = Dr. Aman by Rs 3,000; Cr. Varun by Rs 3,000
Sacrificing ratio = O.R. - N.R.
Aman = 1/2 -4/7 = 7-8/14 = -1/14 x 42000 = 3000
Varun = 1/2 -3/7 = 7-6/14 = 1/14 x 42000 = 3000
General Reserve = 62000
Less Profit and Loss = 20000
(Dr) = 42000
Aman's Capital A/c Dr 3000
To Varun's Capital A/c 3000
Hence, the correct option is 1.
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