Question : At the time of admission of a partner, what will be the effect of the following information? Balance in Workmen compensation reserve Rs. 1,40,000. Claim for workmen compensation Rs. 1,10,000.
Option 1: Rs. 1,40,000 Debited to the Partner's Capital Accounts.
Option 2: Rs. 1,10,000 Debited to Revaluation Account.
Option 3: Rs. 30,000 Credited to the Partner's Capital Accounts.
Option 4: Rs. 30,000 to Debited Revaluation Account.
Correct Answer: Rs. 30,000 Credited to the Partner's Capital Accounts.
Solution : Answer = Rs. 30,000 Credited to the Partner's Capital Accounts.
Rs 30,000 should be distributed to the old partner and in their profit sharing ratio.
Rs 1,10,000 should be shown on the liabilities side of the New firm balance sheet.
Hence, the correct option is 3.
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