The debit balance of the Profit and Loss Account is ₹30,000 and Preliminary Expenses amount to ₹18,000. The old partners share profits in the ratio 2:7. At the time of admission of a new partner, what total amount will be debited to the second old partner’s Capital Account?

Correct answer: ₹37,333.33

The debit balance of the Profit and Loss Account represents an accumulated loss, while Preliminary Expenses are a fictitious asset. Both are written off among the old partners in their old profit-sharing ratio when a new partner is admitted. The total amount is ₹30,000 + ₹18,000 = ₹48,000. The second partner’s share is 7/9, so the amount debited is ₹48,000 × 7/9 = ₹37,333.33. Therefore, option A is correct. Option B is the total amount to be written off, whereas option C is the first partner’s share. Exam tip: Distribute accumulated losses and fictitious assets among old partners in their old ratio.