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Calculate the adjustment of capital due to change in profit sharing ratio from 5:3:2 to 2:5:3.

Accounting

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  1. Calculate the Sacrificing or Gaining Share for each Partner.

    Sacrificing/Gaining Share = Old Share - New Share

    For Ajeet:

    510−210=310 (Sacrifice)\frac{5}{10} - \frac{2}{10} = \frac{3}{10} \text{ (Sacrifice)}

    For Vijeet:

    310−510=−210 (Gain)\frac{3}{10} - \frac{5}{10} = -\frac{2}{10} \text{ (Gain)}

    For Sujeet:

    210−310=−110 (Gain)\frac{2}{10} - \frac{3}{10} = -\frac{1}{10} \text{ (Gain)}

  2. Calculate the Adjustment Amount for each Partner.

    The net revaluation effect is a loss of ₹50,000. Partners who gain in the new ratio will be debited, and partners who sacrifice will be credited for their share of this loss.

    Ajeet (Sacrifice):

    ₹50,000×310=₹15,000 (Credit)\text{₹}50,000 \times \frac{3}{10} = \text{₹}15,000 \text{ (Credit)}

    Vijeet (Gain):

    ₹50,000×210=₹10,000 (Debit)\text{₹}50,000 \times \frac{2}{10} = \text{₹}10,000 \text{ (Debit)}

    Sujeet (Gain):

    ₹50,000×110=₹5,000 (Debit)\text{₹}50,000 \times \frac{1}{10} = \text{₹}5,000 \text{ (Debit)}

  3. Pass the Adjusting Entry.

    The gaining partners' capital accounts are debited, and the sacrificing partner's capital account is credited.

    | Particulars | Debit (₹) | Credit (₹) | | 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