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
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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