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Accountancy · 2025 · 3 marks
Reconstitution of a Partnership Firm – Admission of a PartnerAdjustment for Accumulated Profits and Losses3 marksshort answer
CBSE 2025 · Region 2 · Set 1 · Q18
Sunny and Ujjwal were partners in a firm sharing profits and losses in the ratio of 3: 2. On 1st April, 2024 Timmy was admitted as a new partner for…
Sunny and Ujjwal were partners in a firm sharing profits and losses in the ratio of $\displaystyle 3$ : 2. On 1st April, $\displaystyle 2024$ Timmy was admitted as a new partner for $\displaystyle \frac{1^{\text {th }}}{5}$ share in profits which he acquired equally from Sunny and Ujjwal. On the date of Timmy's admission the Balance Sheet of Sunny and Ujjwal showed investments at ₹ $\displaystyle 5{,}00{,}000$ and a balance of ₹ $\displaystyle 2{,}00{,}000$ in Investment Fluctuation Reserve. Pass necessary journal entries for treatment of Investment fluctuation reserve on the date of Timmy's admission in each of the following cases :
(i)
Market value of Investments was ₹ $\displaystyle 5{,}00$,000.
(ii)
Market value of Investments was ₹ $\displaystyle 3{,}00$,000.
(iii)
Market value of Investments was ₹ $\displaystyle 2{,}00$,000.
Marking-scheme solution
Books of Sunny and Ujjwal
Journal
Date Particulars L.F. Dr. Cr.
Amount Amount
(₹) (₹)
(i) $\displaystyle 2024$ Investment Fluctuation Reserve A/c Dr. $\displaystyle 2{,}00{,}000$
Apr1 To Sunny’s Capital A/c $\displaystyle 1{,}20{,}000$
To Ujjwal’s Capital A/c $\displaystyle 80{,}000$
(Investment Fluctuation Reserve distributed among old
partners in their old profit sharing ratio)
(ii)
” Investment Fluctuation Reserve A/c Dr. $\displaystyle 2{,}00{,}000$
To Investments A/c $\displaystyle 2{,}00{,}000$
(Decrease in the value of investments met out of
Investment Fluctuation Reserve)
(iii)
” Investment Fluctuation Reserve A/c Dr. $\displaystyle 2{,}00{,}000$
Revaluation A/c Dr. $\displaystyle 1{,}00{,}000$
To Investments A/c $\displaystyle 3{,}00{,}000$
(Decrease in the value of investments met out of
Investment Fluctuation Reserve and the balance out of
Revaluation account)
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