Rajni and Ravi are partners in a firm sharing profits in the ratio of 4:1. On April 15, 2025 they admit Meera as a new partner. On that date, there was a balance of Rs. 20,000 in the General Reserve and a credit balance of Rs. 30,000 in the Profit and Loss Account of the Firm. Necessary Journal Entry for this would be:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → General Reserve A/c Dr. Rs. 20,000 and Profit and Loss A/c Dr. Rs. 30,000, to Rajni’s Capital A/c Rs. 40,000 and Ravi’s Capital A/c Rs. 10,000
A new partner has no claim on profits earned before he joins. So a general reserve and a credit balance of Profit and Loss A/c are closed by transferring them to the old partners’ capital accounts in the old ratio of 4 : 1. Both are credit balances, so both accounts are debited to close them.
Accumulated profits = Rs. 20,000 + Rs. 30,000 = Rs. 50,000
Rajni = Rs. 50,000 × 4/5 = Rs. 40,000
Ravi = Rs. 50,000 × 1/5 = Rs. 10,000
General Reserve A/c Dr. 20,000
Profit and Loss A/c Dr. 30,000
To Rajni’s Capital A/c 40,000
To Ravi’s Capital A/c 10,000
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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