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Class 12AccountancyReconstitution - Admission of a PartnerReservesExpert
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On the admission of a new partner, the Bad Debts Reserve is ₹30,000 and actual bad debts amount to ₹12,000. The old partners share profits in the ratio 7:3. What amount will be credited to the first partner’s Capital Account?

Answer and explanation

Correct answer: ₹12,600

The actual bad debts of ₹12,000 are adjusted against the reserve, leaving ₹30,000 − ₹12,000 = ₹18,000. This surplus is credited to the old partners’ Capital Accounts in their old profit-sharing ratio of 7:3. Therefore, the first partner’s share is ₹18,000 × 7/10 = ₹12,600. ₹18,000 is the total surplus, not the first partner’s individual share. Exam tip: First deduct actual bad debts from the reserve, then distribute the balance in the old profit-sharing ratio.

Related tags

Bad Debts ReserveAdmission Of PartnerReconstitution Of PartnershipOld Profit Sharing RatioCapital AccountsReservesReconstitution 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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