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General Reserve ₹90000 was distributed in capital ratio 7:8 instead of old ratio 4:1. How much less or more did the first partner receive?

Answer and explanation

Correct answer: ₹30000 less

The reserve was earned before any change in the partnership, so the first partner should receive it in the old ratio 4:1. Out of ₹90,000, the first partner’s proper share is ₹90,000 × 4/5 = ₹72,000. However, the question says that the reserve was distributed in the capital ratio 7:8. Under that ratio, the first partner receives ₹90,000 × 7/15 = ₹42,000.

The shortfall is ₹72,000 − ₹42,000 = ₹30,000. Thus the first partner received ₹30,000 less than the amount due under the old ratio. The other options either reverse the direction or give an incorrect numerical difference. Hence option A is supported.

Related tags

General ReserveCapital RatioError Correction

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