A and B share profits in the ratio of 7:3. On the admission of a new partner, a revaluation profit of ₹40,000 arises. This profit is to be distributed among the old partners. How much will be credited to B’s Capital Account?

Correct answer: ₹12,000

A revaluation profit is distributed among the old partners in their old profit-sharing ratio. B’s share is \(\frac{3}{7+3}=\frac{3}{10}\). Therefore, the amount credited to B’s Capital Account is \(₹40,000 \times \frac{3}{10}=₹12,000\). ₹28,000 is A’s share, so it is not the correct answer. Exam tip: On reconstitution, distribute revaluation profit or loss in the old profit-sharing ratio.