Question

A and B were partners sharing profits equally. Since A was devoting more time to the business it was agreed that profit sharing ratio will be changed to 2 : 1 from 1st April, 2026. Following balances have been extracted from their books on this date:                                                               ₹ Capitals: A                                      5,00,000                B                                      3,00,000 General Reserve                                90,000 Profit & Loss Account (Dr.)              30,000 It is agreed between the partners that: Goodwill should be valued at ₹ 1,20,000. Profit & Loss Account (Dr.) balance is to be carried forward. Furniture (Book Value ₹ 50,000) be reduced to ₹ 30,000. Computers (Book Value ₹ 1,00,000) be reduced by ₹ 60,000.

Based on the above information, choose the correct option:

Balance of A's Capital Account will be ______.

Options

• ₹ 4,45,000

• ₹ 4,90,000

• ₹ 4,80,000

• ₹ 5,30,000

Answer 1

Balance of A's Capital Account will be ₹ 4,90,000.

Explanation:

Liabilities	₹	Assets	₹
To Revaluation A/c	40,000	By Balance b/d	5,00,000
To B's Capital A/c (Goodwill)	20,000	By General Reserve	45,000
To Balance c/d	4,90,000	By B's Capital A/c (P & L A/c Balance)	5,000
	5,50,000		5,50,000