At the time of admission of a new partner, the General Reserve is ₹1,26,000 and the Profit and Loss Account has a debit balance of ₹54,000. If these two items are adjusted among the old partners in the ratio of 3:2:1, what amount will be credited net to the first partner’s capital account?

Correct answer: ₹36,000

The General Reserve provides a credit of ₹1,26,000, while the Profit and Loss debit balance must be deducted. Thus, net accumulated profit = ₹1,26,000 − ₹54,000 = ₹72,000. The first partner’s share is 3/(3+2+1) = 3/6, so the net credit is ₹72,000 × 3/6 = ₹36,000. ₹72,000 is the total net amount, not the first partner’s individual share. Exam tip: Always deduct the debit balance from the reserve before distributing the net amount in the old ratio.