The Profit and Loss Account has a debit balance of ₹42,000, and preliminary expenses amount to ₹30,000. The old partners share profits in the ratio of 5:4. What total debit will be charged to the first partner?

Correct answer: ₹40,000

The debit balance of the Profit and Loss Account and preliminary expenses are both debit items to be written off among the old partners. Thus, the total debit is ₹42,000 + ₹30,000 = ₹72,000. The first partner’s share is ₹72,000 × 5/9 = ₹40,000. ₹72,000 is the total debit, not the amount charged to the first partner. Exam tip: Write off such debit items among old partners in their old profit-sharing ratio.