W and S are partners in a firm sharing profits and losses in the ratio 4: 5. From 1 st April, 2019, they have decided to share their profits and losses equally. On this date their balance sheet showed Investments of 2,00,000 and Investment Fluctuation Fund of 80,000. However, the market value of the investments is 2,50,000. What will be the amount of Investment Fluctuation Fund to be distributed among the partner?
Solution:
Investment fluctuations fund will be distributed among partners is rs 80,000.
journal entry will be as follows:
Investment fluctuations Fund A/c. Dr. 80,000
To W's capital A/c. 35555.5
To S's capital A/c. 44,444.5
Investment fluctuations fund will be distributed among partners is rs 80,000.
journal entry will be as follows:
Investment fluctuations Fund A/c. Dr. 80,000
To W's capital A/c. 35555.5
To S's capital A/c. 44,444.5