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Question : A, B and C are equal partners in a firm whose books are closed on 31st March every year. If General Reserve of Rs. 40,000 at the time of retirement of partner B when 25% of the balance of General Reserve is to be transferred to Investments Fluctuation Reserve. Choose the correct option.

Option 1: General Reserve A/c ...Dr. 40,000
To A's Capital A/c 10,000
To B's Capital A/c 10,000
To C's Capital A/c 10,000
To Investments Fluctuation Reserve A/c 10,000

Option 2: General Reserve A/c ...Dr. 40,000
To A's Capital A/c 20,000
To B's Capital A/c 10,000
To C's Capital A/c 10,000

Option 3: General Reserve A/c ...Dr. 40,000
To A's Capital A/c 10,000
To C's Capital A/c 10,000
To Investments Fluctuation Reserve A/c 20,000

Option 4: None of the above


Team Careers360 7th Jan, 2024
Answer (1)
Team Careers360 14th Jan, 2024

Correct Answer: General Reserve A/c ...Dr. 40,000
To A's Capital A/c 10,000
To B's Capital A/c 10,000
To C's Capital A/c 10,000
To Investments Fluctuation Reserve A/c 10,000


Solution : Answer (1)

General Reserve A/c ...Dr. 40,000
To A's Capital A/c 10,000
To B's Capital A/c 10,000
To C's Capital A/c 10,000
To Investments Fluctuation Reserve A/c 10,000
(Old ratio 1:1:1)
Hence, the correct option is 1.

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