Ram and Sita are partners in a firm sharing profits in the ratio of 4:1. On April 15, 2025 they admit Naarad as a new partner. On that date, there was a balance of Rs. 25,000 in general reserve and a debit balance of Rs. 10,000 in the profit and loss account of the firm. The journal entry regarding the adjustment of a profit or loss will be:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Ram’s Capital A/c Dr. 8,000 and Sita’s Capital A/c Dr. 2,000, To Profit and Loss A/c 10,000
A debit balance in the Profit and Loss Account is an accumulated loss of the old firm. The new partner has no share in it, so it is written off to the old partners’ capital accounts in their old ratio (4 : 1) at the time of admission.
Ram’s share = Rs. 10,000 × 4/5 = Rs. 8,000
Sita’s share = Rs. 10,000 × 1/5 = Rs. 2,000
Entry: Ram’s Capital A/c Dr. 8,000, Sita’s Capital A/c Dr. 2,000, To Profit and Loss A/c 10,000
The general reserve of Rs. 25,000 is an accumulated profit; it is credited to the old partners by a separate entry, and the question asks only for the loss.
Note: NTA picked this question from an NCERT (2026-27) illustration and changed the figures. Do not ignore NCERT while practising numericals.
NCERT (2026-27 edition):
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