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Class 12AccountancyReconstitution - Admission of a PartnerReservesMedium
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A and B share profits and losses in the ratio of 4:1. The reserve is ₹20,000 and the Advertisement Suspense Account has a balance of ₹5,000. What will be the net credit to A’s account?

Answer and explanation

Correct answer: ₹12,000

The reserve is credited to the partners, while the Advertisement Suspense Account is written off by debiting the partners’ accounts. Therefore, the net amount available for distribution is ₹20,000 − ₹5,000 = ₹15,000. A’s share is ₹15,000 × 4/5 = ₹12,000. Hence, option A is correct. Exam tip: First calculate the net amount after adjusting any debit balance or accumulated loss, and then apply the profit-sharing ratio.

Related tags

ReservesAdvertisement SuspensePartner AdmissionProfit Sharing RatioNet CreditReconstitution Admission Of A PartnerAccountancyClass 12 Mcq
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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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