Bzzii is an online learning platform designed for middle and high school students, from grades 7 to 12. We provide a fun and interactive way to practice your skills and prepare for success.
The firm of Harry, Porter and Ali, Who Have Been Sharing Profits in the Ratio of 2 : 2 : 1, Have Existed for Same Years
Get link
Facebook
X
Pinterest
Email
Other Apps
By
admin
-
The firm of Harry, Porter and Ali, who have been sharing profits in the ratio of 2 : 2 : 1, have existed for same years. Ali wants that he should get equal share in the profits with Harry and Porter and he further wishes that the change in the profit sharing ratio should come into effect retrospectively were for the last three year. Harry and Porter have agreement on this account. The profits for the last three years were:
Rs
2014-15
22,000
2015-16
24,000
2016-17
29,000
Show adjustment of profits by means of a single adjustment journal entry.
Distribution of Profit
Old Ratio (2:2:1)
Harry
Porter
Ali
Total
Year
2003 – 04
(8,800)
(8,800)
(4,400)
=
(22,000)
2004 – 05
(9,600)
(9,600)
(4,800)
=
(24,000)
2005 – 06
(11,600)
(11,600)
(5,800)
=
(29,000)
=
Total Profit of 3 years in old ratio
(30,000)
(30,000)
(15,000)
=
(75,000)
Distribution of 3 years profit in new Ratio (1:1:1)
25,000
25,000
25,000
=
75,000
Adjusted Profit
(5,000)
(5,000)
10,000
NIL
Journal entry
Date
Particulars
L.F
Debit Amount Rs
Credit Amount Rs
Harry’s Capital A/c
Dr.
5,000
Porter’s Capital t A/c
Dr.
5,000
To Ali’s Capital A/c
10,000
(Profit adjusted due to change in profit sharing ratio)
Read the following passage. At the shop there was a well-dressed customer. He bent down and asked the little girl, “What kind of a miracle does your brother need? “I don’t know,” she replied with her eyes welling up. “He’s really sick and Mummy says he needs an operation. But my Daddy can’t pay for it, so I have brought my savings.” “How much do you have?” asked the man. “One dollar and eleven cents, but I can try and get some more,” she answered barely audible. Answer the following questions. 1) Who do you think is the ‘well-dressed customer’ at the shop? 2) What did the well-dressed man ask the little girl? 3) “He’s really sick.” Who does title word ‘he’ refer to here ? What is he to Tess? 4) What did he need urgently? 5) How much money did the little girl have with her? SOLUTION 1. I think the well-dressed customer at the shop is Dr. Carlton Armstrong. 2. The well-dressed man asked the little girl what kind of a miracle her brother needed. 3. The word ‘he’ refers to A...
What journal entries will be made in the following cases when company redeems debentures at the expiry of period by serving the notice: (a) when debentures were issued at par with a condition to redeem them at premium; (b) when debentures were issued at premium with a condition to redeem that at par; and (c) when debentures were issued at discount with a condition to redeem them at premium? SOLUTION Journal entries S.No. Particulars L.F. Amount (Rs.) Amount (Rs.) (a) Debenture A/c Dr. Premium on Redemption of Debenture A/c Dr. To Debenture Holders A/c (Amount due for redemption of Debentures) Debenture Holders A/c Dr. To Bank A/c (Payment made to Debenture Holders) (b) Debenture A/c Dr. To Debenture Holders A/c (Amount due for redemption of debentures that were issued at premium with term of redeemable at par) Debenture Holders A/c Dr. To Bank...
Describe how accounts are used to record information about the effects of transactions? SOLUTION Every transaction is recorded in the original book of entry (journal) in order of their occurrence; however, if we want to know that how much we receive from our debtors or how much to pay to the creditors, it is not possible to determine at a single movement. Hence, we prepare accounts to know the position of business activities in the meantime. There are some steps to record transactions in accounts: Step 1: Locate the account in ledger, Step 2: Enter the date of transaction in the date column of the debit side of Account. Step 3: In the ‘Particulars’ column of the debit side of Account, the name of corresponding account is to be written Step 4: Enter the page number of the ledger in the Journal Folio (J.F.) column of Account. Step 5: Enter the amount in the ‘Amount’ column. Step 6: Same steps are to be followed to post entries in the credit side of Account. Step 7: Afte...
Comments
Post a Comment