The Reserve Fund is ₹63,000 and the Capital Reserve is ₹27,000. Assuming that both amounts are to be distributed among the old partners on admission, A and B are the old partners sharing profits in the ratio of 1:2. What total amount will be credited to A’s account?

Correct answer: ₹30,000

The total amount to be distributed is ₹63,000 + ₹27,000 = ₹90,000. A’s share under the old profit-sharing ratio is \(\frac{1}{1+2}=\frac{1}{3}\). Therefore, the amount credited to A is ₹90,000 × \(\frac{1}{3}\) = ₹30,000. ₹90,000 is the total reserve amount, whereas ₹27,000 represents only the Capital Reserve. Exam tip: When the question states that reserves are to be distributed, allocate them among the old partners in their old profit-sharing ratio.