X and Y are partners in a firm sharing profits in the ratio of 4:1 . Z is admitted in the firm for 1/5th share. On the admission of Z there was a bala - Accountancy MCQ CUET Accountancy 2022 15 July Shift 2 2026 | ExamTest.live

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X and Y are partners in a firm sharing profits in the ratio of 4 : 1 . Z is admitted in the firm for \frac{1}{5} th share. On the admission of Z there was a balance of Rs. 20, 000 in general reserve. What would be the journal entry for distributing the reserve?

A $General Reserve a/c Dr Rs. 20,000 to X's Capital A/c Rs.16,000, To Y's Capital A/c Rs. 4,000 (Being Reserve distributed)$
B $General Reserve a/c Dr Rs. 20,000 to X's Capital A/c Rs. 20,000$
C $General Reserve a/c Dr Rs. 20,000 to Y's Capital A/c Rs. 20,000$
D $General Reserve a/c Dr Rs. 20,000 to X's Capital A/c Rs. 10,000, To Y's Capital A/c Rs. 10,000$

Solution & Step-by-step Explanation

Accumulated reserves like General Reserve are distributed among the old partners in their old profit-sharing ratio at the time of admission of a new partner.Old profit-sharing ratio of X and Y = 4 : 1 X's share = 20, 000 \times \frac{4}{5} = 16, 000 Y's share = 20, 000 \times \frac{1}{5} = 4, 000 The journal entry is: General Reserve A/c Dr. 20, 000 To X’s Capital A/c 16, 000 To Y’s Capital A/c 4, 000

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X and Y are partners in a firm sharing profits in the ratio of 4 : 1 . Z is admitted in the firm for \frac{1}{5} th share. On the admission of Z there was a balance of Rs. 20, 000 in general reserve. What would be the journal entry for distributing the reserve?

General Reserve a/c Dr Rs. 20,000 to X's Capital A/c Rs.16,000, To Y's Capital A/c Rs. 4,000 (Being Reserve distributed)

General Reserve a/c Dr Rs. 20,000 to X's Capital A/c Rs. 20,000

General Reserve a/c Dr Rs. 20,000 to Y's Capital A/c Rs. 20,000

General Reserve a/c Dr Rs. 20,000 to X's Capital A/c Rs. 10,000, To Y's Capital A/c Rs. 10,000

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