Question

A and B are partners sharing profits and losses in the ratio of 3 : 2. They admitted C with effect from 1st April, 2021. The new profit-sharing ratio is agreed at 4 : 3 : 3. An extract of their Balance Sheet as at 31st March, 2021, is as follows: Liabilities ₹ Assets ₹ Workmen Compensation Reserve 90,000

Based on the above information, you are required to answer the following question:

If a claim for Workmen’s Compensation is estimated at ₹ 60,000:

Options

• Cr. A’s Capital A/c with ₹ 20,000 and B’s Capital A/c with ₹ 10,000

• Dr. A’s Capital A/c with ₹ 18,000 and B’s Capital A/c with ₹ 12,000

• Cr. A’s Capital A/c with ₹ 18,000 and B’s Capital A/c with ₹ 12,000

• Cr. A’s Capital A/c with ₹ 12,000 and B’s Capital A/c with ₹ 9,000 and C’s Capital A/c with ₹ 9,000

Answer 1

Cr. A’s Capital A/c with ₹ 18,000 and B’s Capital A/c with ₹ 12,000

Explanation:

The total Workmen’s Compensation Reserve (WCR) amount is ₹ 90,000. A claim of ₹ 60,000 is estimated.

Amount for Distribution = Total WCR − Claim Liability

= 90,000 − 60,000

= 30,000

Distribute the remaining reserve among old partners:

A’s Share = `30,000 xx 3/5`

= 18,000

B’s Share = `30,000 xx 2/5`

= 12,000