Reserve fund is ₹45000. A and B share old profits in 7:8. How much will be credited to A?

Correct answer: ₹21000

The direct answer is option A: A receives a credit of ₹21,000. A reserve fund is an accumulated profit belonging to the partners who earned profits before the new partner’s admission. Therefore it is distributed in the old profit-sharing ratio, which is 7:8. First find total parts: 7 + 8 = 15. A’s share is 7 parts out of 15. Calculation: A’s amount = ₹45,000 × 7/15 = ₹3,000 × 7 = ₹21,000. B would receive ₹45,000 × 8/15 = ₹24,000, and together the two amounts equal ₹45,000. Option A is correct because it matches A’s seven parts. Option B is wrong because ₹24,000 is B’s share, based on eight parts. Option C is wrong because ₹15,000 does not follow the ratio and represents only one-third of the reserve. Option D is wrong because the entire reserve cannot be credited to A; it must be divided between A and B. The credit is made to the old partners’ capital or current accounts, not to the new partner. Memory cue: add ratio parts, divide total reserve by parts, then multiply by the partner’s parts.