A, B and C share profits and losses in the ratio 5:4:3. The General Reserve is ₹96,000 and Preliminary Expenses are ₹60,000. What will be the net credit to B’s Capital Account for these adjustments?

Correct answer: ₹12,000

The net adjustment is a credit of ₹36,000, calculated as ₹96,000 General Reserve minus ₹60,000 Preliminary Expenses. B’s share is 4/12, so his net credit is ₹36,000 × 4/12 = ₹12,000. ₹32,000 represents B’s share of the General Reserve alone and ignores the debit for Preliminary Expenses. Exam tip: combine credits such as reserves and accumulated profits, deduct write-offs, and then distribute the net amount in the old profit-sharing ratio.