Page 12 - L N (change in psr)

b. In case of loss in Revaluation Account:

Partners’ Capital (or Current) A/cs …Dr.
To Revaluation A/c (Individually in old profit sharing ratio)

Adjustment of Capital:

I.In the event of change in profit sharing ratio, adjustments are made for change
in values of assets and liabilities, goodwill and distribution of reserves,

accumulated profits and losses, change in partners’ capitals.

ii. Also, if the partners decide total capital of the firm and also that the capital

shall be in profit sharing ratio of the partners, then also capital of the partners
has to be adjusted.

III In case the partners’ capital(s) fall(s) short or has shortage of the required

capital, then such partner(s) will have to bring more capital.

IV In case the partners’ capital(s) is (are) surplus (excess) of the required capital,

then such partner(s) may withdraw surplus or excess capital.

V Any shortage or surplus of Capital can be adjusted through Current Accounts.

VI Accounting Treatment: For Adjusting Shortage of Capital:

Bank A/c or Concerned Partners’ Current A/c …Dr.

To Concerned Partners’ Capital A/c

For Adjusting Surplus of Capital:

Concerned Partners’ Capital A/c …Dr.

To Bank A/c or Concerned Partners’ Current A/c

Adjustment of Partners’ Capital, if total Capital of the new firm is already given:

i. When total Capital of the new firm (reconstituted firm) is already given, then it