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At the time of admission, a Reserve Fund of ₹1,08,000 is to be distributed among the old partners A, B and C in their profit-sharing ratio of 2:3:4. C’s share was mistakenly recorded as ₹30,000. By how much was C’s share under-recorded?

Answer and explanation

Correct answer: ₹18,000 under-recorded

The total of the old partners’ ratio is 2+3+4=9. C’s correct share is ₹1,08,000 × 4/9 = ₹48,000. Since only ₹30,000 was recorded, the amount under-recorded is ₹48,000 − ₹30,000 = ₹18,000. Exam tip: Reserves and accumulated profits are distributed among old partners in their old profit-sharing ratio.

Related tags

Reserve FundAdmission Of PartnerOld RatioError CorrectionPartner ShareReservesReconstitution Admission Of A PartnerAccountancy

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