Madhu, Raj, Atul and Prachi were partners in a firm sharing profit and losses in the ratio of 3: 2: 4: 1. With effect from 1st April, 2023, they…

Books of Madhu, Raj, Atul and Prachi Journal Date Particulars L.F Dr. Amount Cr. Amount ₹ ₹ $\displaystyle 2023$ General Reserve A/c Dr $\displaystyle 1,00,000$ April $\displaystyle 1$ To Madhu’s Capital A/c $\displaystyle 30,000$ To Raj’s Capital A/c $\displaystyle 20,000$ To Atul’s Capital A/c $\displaystyle 40,000$ To Prachi’s Capital A/c $\displaystyle 10,000$ (Distribution of General Reserve in old profit-sharing ratio) $\displaystyle 2023$ Raj’s Capital A/c Dr $\displaystyle 1,00,000$ April $\displaystyle 1$ Prachi’s Capital A/c Dr $\displaystyle 3,00,000$ To Madhu’s Capital A/c $\displaystyle 1,00,000$ To Atul’s Capital A/c $\displaystyle 3,00,000$ (Adjustment for Goodwill on account of change in profit sharing ratio) Working notes: Calculation of gain/ sacrifice Gaining Share = New share- Old share Madhu = $\displaystyle 1$/$\displaystyle 4$ - $\displaystyle 3$/$\displaystyle 10$ = -$\displaystyle 1$/$\displaystyle 20$ (Sacrifice) Raj = $\displaystyle 1$/$\displaystyle 4$- $\displaystyle 2$/$\displaystyle 10$ = $\displaystyle 1$/$\displaystyle 20$ (Gain) Atul = $\displaystyle 1$/$\displaystyle 4$- $\displaystyle 4$/$\displaystyle 10$ = -$\displaystyle 3$/$\displaystyle 20$ (Sacrifice) Prachi = $\displaystyle 1$/$\displaystyle 4$ - $\displaystyle 1$/$\displaystyle 10$ = $\displaystyle 3$/$\displaystyle 20$ (Gain)