A, B & C were sharing profits & losses in the ratio of 3:2:1. They decided to share profits & losses equally in the future. The general reserve appeared in their books at ₹60,000. Goodwill was valued at ₹1,20,000. The partners do not want to disturb the general reserve. The adjusting entry will be:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → C’s capital A/C Dr. 30,000 To A’s Capital A/C 30,000
When the partners change their ratio but do not want to disturb the reserve, the reserve is adjusted along with goodwill through one adjusting entry: the gaining partner is debited and the sacrificing partner is credited.
Amount to adjust = General reserve ₹60,000 + Goodwill ₹1,20,000 = ₹1,80,000
A: old 3/6, new 2/6 = sacrifice 1/6
B: old 2/6, new 2/6 = no change
C: old 1/6, new 2/6 = gain 1/6
Adjustment = ₹1,80,000 × 1/6 = ₹30,000
C’s Capital A/c Dr. ₹30,000
To A’s Capital A/c ₹30,000
NCERT (2026-27 edition):
NCERT (2026-27 edition): |
