AMITY INTERNATIONAL SCHOOL, SECTOR-1,

VASUNDHARA
CLASS XII
SUBJECT: ACCOUNTANCY
CH-3: CHANGE IN PROFIT SHARING RATIO
Worksheet 1
1 Meera, Myra and Neera were partners sharing profits in the ratio of 2 : 2 : 1. They
decided to share future profits in the ratio of 7 : 5 : 3 with effect from 1st April, 2019.
Their Balance Sheet as on that date showed a balance of ₹ 45,000 in Advertisement
Suspense Account. The amount to be debited respectively to the capital accounts of
Meera, Myra and Neera for writing off the amount in Advertisement Suspense Account
will be :
(A) ₹ 18,000, ₹ 18,000 and ₹ 9,000
(B) ₹ 15,000, ₹ 15,000 and ₹ 15,000
(C) ₹ 21,000, ₹ 15,000 and ₹ 9,000
(D) ₹ 22,500, ₹ 22,500 and Nil
2 Milan, Khilan and Silam were partners sharing profits in the ratio of 2 : 2 : 1. They
decided to share future profits in the ratio of 7 : 5 : 3 with effect from 1st April, 2019.
After the revaluation of assets and re-assessment of liabilities, Revaluation Account
showed a loss of ₹ 15,000. The amount to be debited in the capital account of Milan
because of loss on revaluation will be :
(A) ₹ 15,000 (B) ₹ 6,000 (C) ₹ 1,000 (D) ₹ 5,000
3 State the ratio in which the partners share profits or losses on revaluation of assets
and liabilities, when there is a change in profit sharing ratio amongst partners?
4 Anant, Gulab and Khushbu were partners in a firm sharing profits in the ratio of
5 : 3 : 2. From 1.4.2014, they decided to share the profits equally. For this purpose the
goodwill of the firm was valued at Rs. 2,40,000. Pass necessary journal entry for the
treatment of goodwill on change in the profit sharing ratio of Anant, Gulab and
Khushbu.
5 Jay, Vijay and Ajay are sharing profits and losses in the ratio of 5:3:2. They decided to
share profits and losses in the ratio of 2:3:5 with effect from 1 st April, 2023. They also
decide to record the effect of the following revaluations without affecting the book
values of the assets and liabilities by passing and Adjustment Entry:
Book Values (₹) Revised Values (₹)
Land and Building 10,00,000 11,00,000
Plant and Machinery 5,00,000 4,80,000
Sundry Creditors 1,20,000 1,10,000
Outstanding Expenses 1,20,000 1,50,000
Pass the necessary Adjustment Entry.
6 Kumar, Gupta and Kavita were partners in a firm sharing profits and losses equally.
The firm was engaged in the storage and distribution of canned juice and its godowns
were located at three different places in the city. Each godown was being managed
individually by Kumar, Gupta and Kavita. Because of increase in business activities at
the godown managed by Gupta, he had to devote more time. Gupta demanded that his
share in the profits of the firm be increased, to which Kumar and Kavita agreed. The
new profit sharing ratio was agreed to be 1 : 2 : 1. For this purpose the goodwill of the
firm was valued at two years purchase of the average profits of last five years. The
profits of the last five years were as follows:
Year I II III IV V
Profit (Rs) 4,00,000 4,80,000 7,33,000 (33,000) 2,20,000
You are required to :
(i) Calculate the goodwill of the firm.
 (ii) Pass necessary Journal Entry for the treatment of goodwill on change in
profit sharing ratio of Kumar, Gupta and Kavita.
7 S, T, U and V were partners in a firm sharing profits in the ratio of 4 : 3 : 2 : 1. On
1-4-2016 their Balance Sheet was as follows :
Balance Sheet of S, T, U and V as on 1-4-2016
Amount Amount
Liabilities Assets
₹ ₹
Capitals : Fixed Assets 4,40,000
S 2,00,000 Current Assets 2,00,000
T 1,50,000
U 1,00,000
V 50,000 5,00,000
Sundry Creditors 80,000
Workmen Compensation
Reserve 60,000
6,40,000 6,40,000
From the above date partners decided to share the future profits in 3 : 1 : 2 : 4 ratio.
For this purpose the goodwill of the firm was valued at ` 90,000. The partners also
agreed for the following :
(i) The claim for workmen compensation has been estimated at ₹ 70,000.
(ii) To adjust the capitals of the partners according to new profit sharing ratio by
opening partners current accounts.
Prepare Revaluation Account, Partners’ Capital Accounts and the Balance Sheet
of the reconstituted firm.