If there is no claim against workmen compensation reserve, it is ............. at the time of admission of a partner.

Fill in the blank with the correct answer from the option given below:

Credited to old Partner's Capital A/c

The correct answer is option 3- Credited to old Partner's Capital A/c.

Sometimes a firm may have accumulated profits not yet transferred to capital accounts of the partners. These are usually in the form of general reserve, reserve and/or Profit and Loss Account. The new partner is not entitled to have any share in such accumulated profits. These are distributed among the partners (existing partners) by transferring it to their capital or current accounts in old profit sharing ratio. Similarly, if there are some accumulated losses in the form of a debit balance of profit and loss account and/or deferred revenue expenditure appearing in the balance sheet of the firm, they are also debited to partners capital or current A/c.

In the above question, there is no claim so all the reserve is transferred to old partners in their old ratio. The journal entry will be-
Workmen Compensation Reserve A/c Dr.
   To Old Partner's Capital A/c

Partner account is credited as it will increase their capital balance.