On the admission of a partner, an existing General Reserve of Rs. 90,000 is transferred to the old partners. A and B share profits in the ratio of 2:1. What amount is credited to B?
Correct answer: B. Rs. 30,000
- A. Rs. 20,000
- B. Rs. 30,000
- C. Rs. 45,000
- D. Rs. 60,000
Explanation
An existing reserve belongs to the old partners and is distributed in their old profit-sharing ratio. B receives one-third of Rs. 90,000, which is Rs. 30,000.
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About Partnership Accounts
Partnership accounts cover the partnership agreement, capital and current accounts, profit and loss appropriation, salaries, interest on capital, interest on drawings and profit-sharing ratios. They also address changes in partnership, including admission, retirement, goodwill, revaluation, dissolution and the settlement of partners’ balances.
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