Question

A, B and C were partners in a firm sharing profits in the ratio of 1 : 2 : 2. On 1st July, 2025 A retired and the new profit sharing ratio of B and C was 3 : 2. Goodwill of the firm was valued at ₹ 4,00,000. Workmen Compensation Reserve appears in the books at ₹ 2,00,000 and there is a claim of ₹ 80,000 against it. Investment Fluctuation Reserve appears in the books at ₹ 1,00,000 when Investments (Market Value ₹ 6,00,000) appear at ₹ 10,00,000. Advertisement Suspense Account appears in the books at ₹ 50,000.

You are required to answer the following questions:

In respect of Workmen Compensation Reserve:

Options

• ₹ 1,20,000 will be credited to all partners in old ratio.

• ₹ 1,20,000 will be credited to B and C equally.

• ₹ 1,20,000 will be credited to B and C in 3 : 2.

• ₹ 1,20,000 will be debited to B and C in gaining ratio.

Answer 1

₹ 1,20,000 will be credited to all partners in old ratio.