On the admission of a new partner, old partners A and B share profits and losses in the ratio of 13:7. The General Reserve is ₹80,000, and Preliminary Expenses of ₹20,000 are to be written off. What will be the net credit to the Capital Account of old partner A?

Correct answer: ₹39,000

The General Reserve is credited to the old partners’ Capital Accounts in their old profit-sharing ratio. A’s share of the reserve is ₹80,000 × 13/20 = ₹52,000. Writing off Preliminary Expenses debits A’s Capital Account by ₹20,000 × 13/20 = ₹13,000. Therefore, the net credit to A is ₹52,000 − ₹13,000 = ₹39,000. ₹52,000 represents only A’s share of the reserve and does not consider the debit for Preliminary Expenses. Exam tip: on admission, reserves are credited and fictitious expenses written off are debited to the old partners’ accounts.