Question - 14

Lav and Kush are partners in a firm sharing profits in the ratio of 3:2 their balance sheet as a 31st March, 2018 was follows:

Liabilities : Creditors Rs. 40,000, Lav's capital Rs. 80,000, Kush's capital Rs. 50,000.

Assets : Cash Rs. 25,000, Building Rs. 80,000, Stock Rs. 35,000, Plant Rs. 20,000, Debtors Rs. 10,000.

The partners decide to share profits equally w.e.f. April, 2018 it was agreed that:

  1. Building will appreciated by Rs. 20,000.
  2. Plant will be depreciated by Rs. 2,000.
  3. A provision for doubtful debts be made on debtors @ 5%.
you are required to record the journal entry to be made in the books of the firm on account of change in the profit sharing ratio.

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