Question : Due to the change in the profit sharing ratio, X sacrifices is 3/10 while Z’s Gain is 3/10. They decide to record the effect of the following without affecting the book figure, by passing an adjustment entry
General Reserve Cr Rs 35,000
Profit and loss Cr Rs 15,000
Advertisement suspense Dr Rs 20,000
The necessary adjustment entry will be
Option 1: Dr Z and Cr X by Rs 9,000
Option 2: Dr X and Cr Y by Rs 9,000
Option 3: Dr X and Cr Y by Rs 18,000
Option 4: Dr Y and Cr X By Rs 9,000
Correct Answer: Dr Z and Cr X by Rs 9,000
Solution : Answer = Dr Z and Cr X by Rs 9,000
General Reserve = 35000
Profit and Loss (Cr) = 15000
= 50,000
Less Advertisement Suspense A/c = 20,000
= 30,000
Z's Capital A/c Dr 9000
To X's Capital A/c 9000
(30,000 x 3/10) Hence, the correct option is 1.
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