Sarthaks Test
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X and Y are partners in a firm sharing profits and losses in the ratio of 3:2. With effect from 1st April, 2016, they decided to share future profits equally. On the date of change in the profit-sharing ratio, the Profit and Loss Account showed a credit balance of Rs.1,50,000. Record the necessary Journal entry for the distribution of the balance in the Profit and Loss Account immediately before the change in the profit-sharing ratio.

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Working Notes:

1. Calculation of share of profit and lass A

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