A & B are partners sharing profits in the ratio of 3:2.Their business is running at a loss so they decided to dissolve their partnership firm.

What will be the journal entry if workmen's compensation reserve in the balance sheet is of ₹60000 and there was no liability towards workmen compensation?

Workmen compensation reserve Dr.. ₹60000
     To A's Capital A/c                                         ₹36000
     To B's Capital A/c                                         ₹24000
(Distribution of reserve)

Whole amount will be distributed between partners in their profit-sharing ratio as there is no liability regarding this. So, entry will be-
Workmen compensation reserve Dr.. ₹60000
     To A's Capital A/c                                         ₹36000
     To B's Capital A/c                                         ₹24000
(Distribution of reserve)