A and B share profits in the ratio of 7:6. The General Reserve is ₹91,000 and Preliminary Expenses are ₹26,000. At the admission of a new partner, what will be the net credit to B’s capital account?

Correct answer: ₹30,000

The General Reserve is credited to the old partners in the old ratio, whereas Preliminary Expenses are written off in that ratio. Thus, the net amount is ₹91,000 − ₹26,000 = ₹65,000. B’s share is ₹65,000 × 6/13 = ₹30,000. Therefore, B’s capital account receives a net credit of ₹30,000. Exam tip: Adjust debit items such as preliminary expenses against the reserve before distributing the net amount among the old partners.