Question

A and B are partners with capitals of ₹ 3,00,000 and ₹ 2,00,000, respectively. As per the partnership deed:

1. Profits and losses are to be shared in the ratio of 2 : 1.
2. 10% of the distributable profit should be transferred to General Reserve.

For the year ending 31st March, 2024, B’s share of profit was ₹ 1,20,000.

The amount transferred to General Reserve will be:

Options

• ₹ 12,000

• ₹ 36,000

• ₹ 24,000

• ₹ 40,000

Answer 1

₹ 40,000

Explanation:

B’s share of profit = ₹ 1,20,000

The total distributable profit is calculated by dividing B’s share of profit by B’s share in the ratio:

Total Distributable Profit = `(1,20,000)/(1/3)`

= 1,20,000 × 3

= 3,60,000

The problem states that 10% of the profit was transferred to the General Reserve, and the remaining 90% was the distributable profit for the partners.

Hence, Total distributable profit = `3,60,000 xx 100/90`

= 4,00,000

Calculate the amount transferred to General Reserve:

The amount transferred to the General Reserve is 10% of the total profit.

= `4,00,000 xx 10/100`

= 40,000