Three partners share profits and losses in the ratio 1:4:5. At the time of reconstitution, the General Reserve is ₹80,000 and Advertisement Suspense Expenditure is ₹30,000. What net amount will be credited to the second partner’s Capital Account?

Correct answer: ₹20,000

The General Reserve is credited to the partners, whereas Advertisement Suspense Expenditure represents a loss and must be deducted. Thus, the net amount is ₹80,000 − ₹30,000 = ₹50,000. The second partner is entitled to 4 out of the total 10 parts, so the net credit is ₹50,000 × 4/10 = ₹20,000. ₹32,000 would result from distributing the General Reserve alone, so it is incorrect. Exam tip: Deduct debit-balance losses from accumulated profits before distributing the net amount in the partners’ profit-sharing ratio.