Rajinder and Surinder are partners in a firm sharing profits in the ratio of 4:1. On April 15, 2017, they admitted Narender as a new partner. On that date, there was a balance of ₹20,000 in general reserve and a debit balance of ₹10,000 in the profit and loss account of the firm. Which among the following statements is correct for transferring profit and loss account?
Answer & explanation
Correct answer: option 2
The correct answer is option 2- ₹2,000 will be debited to Surinder's Capital A/c.
Rajinder and Surinder are partners in a firm sharing profits in the ratio of 4:1. The debit balance of ₹10,000 in the profit and loss account of the firm is transferred to old partners in old ratio.
Rajinder's share = 10,000 x 4/5
= 8,000
Surinder's share = 10,000 x 1/5
= 2,000
Debit balance is a loss of the firm so partner's capital account are debited for this. Journal entry for this-
Rajinder's Capital A/c Dr. 8,000
Surinder's Capital A/c Dr. 2,000
To Profit & loss A/c 10,000
So, ₹2,000 will be debited to Surinder's Capital A/c