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Class 12AccountancyReconstitution - Admission of a PartnerReservesEasy
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A and B share profits and losses in the ratio of 3:2. The Advertisement Suspense Account has a balance of ₹10,000. On writing off this amount in the old ratio at the time of admission of a partner, how much will be debited to A’s Capital Account?

Answer and explanation

Correct answer: ₹6,000

Advertisement Suspense Account represents a fictitious asset, so it is written off by debiting the partners’ Capital Accounts in the old profit-sharing ratio. A’s share = ₹10,000 × 3/5 = ₹6,000. ₹4,000 is B’s share and therefore cannot be debited to A’s account. Exam tip: Use the old ratio when writing off accumulated losses or fictitious assets at the time of admission.

Related tags

Advertisement SuspenseOld RatioAdmission Of PartnerFictitious AssetsPartnership AccountingReservesReconstitution Admission Of A PartnerAccountancy
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10 more MCQs
  1. 1At the time of admission of a new partner to whom is general reserve given?
  2. 2At the time of admission how is credit balance of Profit and Loss Account treated?
  3. 3At the time of admission what does debit balance of Profit and Loss Account show?
  4. 4A and B share profits in the old ratio of 3:2. At the time of admission of a new partner, the general reserve is ₹50,000. How much will A receive from the general reserve?
  5. 5X and Y are partners sharing profits in the old ratio of 4:1. The firm's reserve fund is ₹25,000. On reconstitution of the partnership, what share of the reserve fund will Y receive?
  6. 6Why does the new partner not receive a share of the old General Reserve?
  7. 7Which is the correct journal entry for distributing general reserve?
  8. 8Which entry is made for writing off debit balance of Profit and Loss Account?
  9. 9Profit and Loss Account has credit balance ₹30000. A and B share in 2:1. How much will be credited to B?
  10. 10A firm's Profit and Loss Account has a debit balance of ₹18,000. Partners A and B share profits and losses in the old ratio of 5:4. What amount will be debited to A's Capital Account?
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