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Class 12AccountancyReconstitution - Admission of a PartnerReservesEasy
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The capital reserve is ₹66,000, and the old profit-sharing ratio of A and B is 7:4. At the time of admission of a new partner, what amount will be credited to A’s Capital Account?

Answer and explanation

Correct answer: ₹42,000

On the admission of a new partner, the capital reserve is distributed among the old partners in their old profit-sharing ratio. A’s share = ₹66,000 × 7/(7+4) = ₹66,000 × 7/11 = ₹42,000. Therefore, ₹42,000 will be credited to A’s Capital Account. Exam tip: In admission questions, use the old partners’ old ratio for distributing existing reserves, not the new ratio.

Related tags

Capital ReserveAdmission Of PartnerOld RatioPartnership AccountsNumericalReservesReconstitution 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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