At the time of admission of a new partner, the credit balance of the Profit and Loss Account amounting to ₹42,000 is to be distributed between the old partners A and B in their old profit-sharing ratio of 4:3. What amount will be credited to B’s account?

Correct answer: ₹18,000

A credit balance in the Profit and Loss Account is distributed among the old partners in their old profit-sharing ratio. The total parts are 4+3=7, so B’s share is \(₹42,000 \times \frac{3}{7}=₹18,000\). ₹24,000 is A’s share because A’s fraction is 4/7. Exam tip: For reserves or credit balances at admission, use the old ratio, not the new ratio after admission.