A, B, and C share profits and losses in the ratio of 3 : 2 : 1 . They decide to share profits and losses equally in the future. On that date, a Genera - Accountancy MCQ CUET Accountancy 2023 28 May Shift 1 2026 | ExamTest.live

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A, B, and C share profits and losses in the ratio of 3 : 2 : 1 . They decide to share profits and losses equally in the future. On that date, a General Reserve of Rs. 60, 000 appears in their books, and Goodwill is valued at Rs. 1, 20, 000 . If the partners prefer not to disturb the General Reserve figure in the books, what adjustment entry must be passed?

A $A's Capital A/c Dr. 1,80,000 to C's Capital A/c 1,80,000$
B $A's Capital A/c Dr. 1,80,000 to B's Capital A/c 1,20,000 to C's Capital A/c 60,000$
C $C's Capital A/c Dr. 30,000 to A's Capital A/c 30,000$
D $C's Capital A/c Dr. 1,80,000 to A's Capital A/c 1,20,000 to B's Capital A/c 60,000$

Solution & Step-by-step Explanation

Step-by-step adjustment computation:Calculate Sacrificing / Gaining Ratios (Old Share - New Share): Old Ratio = 3 : 2 : 1 ⟹ (\frac{3}{6}, \frac{2}{6}, \frac{1}{6}) New Ratio = 1 : 1 : 1 ⟹ (\frac{1}{3}, \frac{1}{3}, \frac{1}{3}) = (\frac{2}{6}, \frac{2}{6}, \frac{2}{6}) Partner A: \frac{3}{6} - \frac{2}{6} = \frac{1}{6} (Sacrifice)Partner B: \frac{2}{6} - \frac{2}{6} = 0 (No change)Partner C: \frac{1}{6} - \frac{2}{6} = - \frac{1}{6} (Gain)Determine Total Value to Adjust:Since the general reserve is not to be distributed/disturbed, both General Reserve and Goodwill must be adjusted together through a single journal entry: Total Value = General Reserve + Valued Goodwill Total Value = 60, 000 + 1, 20, 000 = Rs. 1, 80, 000 Compute Adjustment Shares:C's Gain Amount: Rs. 1, 80, 000 \times \frac{1}{6} = Rs. 30, 000 A's Sacrifice Amount: Rs. 1, 80, 000 \times \frac{1}{6} = Rs. 30, 000 Journal Entry:Debit the gaining partner and credit the sacrificing partner: C’s Capital A/c Dr. 30,000 To A’s Capital A/c 30,000

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A, B, and C share profits and losses in the ratio of 3 : 2 : 1 . They decide to share profits and losses equally in the future. On that date, a General Reserve of Rs. 60, 000 appears in their books, and Goodwill is valued at Rs. 1, 20, 000 . If the partners prefer not to disturb the General Reserve figure in the books, what adjustment entry must be passed?

A's Capital A/c Dr. 1,80,000 to C's Capital A/c 1,80,000

A's Capital A/c Dr. 1,80,000 to B's Capital A/c 1,20,000 to C's Capital A/c 60,000

C's Capital A/c Dr. 30,000 to A's Capital A/c 30,000

C's Capital A/c Dr. 1,80,000 to A's Capital A/c 1,20,000 to B's Capital A/c 60,000

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