Frank, George and Hemant were partners in a firm sharing profits in the ratio of 5:3:2. They decided to change their profit-sharing ratio to 2:5:3 with effect from 1st April, 2023. Their Balance Sheet as at 31st March, 2023 was as follows:
Balance Sheet of Frank, George and Hemant as at 31st March, 2023
| Liabilities | Amount (Rs.) | Assets | Amount (Rs.) | ||
|---|---|---|---|---|---|
| Capitals: Frank George Hemant Creditors Employees’ Provident Fund General Reserve |
4,00,000 3,00,000 2,00,000 |
9,00,000 5,00,000 1,00,000 2,00,000 |
Land Building Machinery Stock Debtors Cash |
5,00,000 3,00,000 2,00,000 1,50,000 2,50,000 3,00,000 |
|
| Total | 17,00,000 | Total | 17,00,000 | ||
It was decided that:
(i) The value of land having appreciated be brought up to Rs. 6,50,000.
(ii) Goodwill of the firm was valued at Rs. 2,00,000. Goodwill was not to appear in the books of the firm.
Pass the necessary journal entries in the books of the firm.
Marks-4, CBSE: 2023-24/Zone-3/Set-1/Q-22
Answer :
