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At the time of admission of a new partner, A, B and C share profits in the ratio 5:2:1. If the Capital Reserve is ₹64,000 and is to be distributed among the old partners in their old ratio, what will be B’s share?

Answer and explanation

Correct answer: ₹16,000

The total old profit-sharing ratio is \(5+2+1=8\), and B is entitled to 2 parts. Hence, B’s share of the Capital Reserve is \(₹64,000 \times \frac{2}{8}=₹16,000\). ₹40,000 is A’s share and ₹8,000 is C’s share, so those options are incorrect. Exam tip: Multiply the reserve by the concerned partner’s ratio divided by the total ratio.

Related tags

Capital ReservePartner AdmissionOld Profit Sharing RatioPartnership AccountingReservesNumericalReconstitution Admission Of A PartnerAccountancy

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