A & B are partners sharing profits & losses in the ratio of 3 : 2. They admit C for 1/4th share in the profits. On the date of admission, there exists a General Reserve of ₹4,60,000. They decided to retain it in the new Balance Sheet. The accounting treatment for it would be :

C's capital a/c will be debited by ₹1,15,000

C's share = 1/4
Total share = 1
Remaining share = 1-1/4
                           =3/4
This 3/4 is divided into old partners in their old ratio to know their new share.
A's new share = 3/4 x 3/5
                        = 9/20
B's new share = 3/4 x 2/5
                        = 6/20
New ratio between A, B & C is 9/20:6/20:1/4 or 9/20:6/20:5/20
                                             = 9:6:5
Sacrifice of A = 3/5 - 9/20
                     = (12-9)/20
                     = 3/20
Sacrifice of B = 2/5 - 6/20
                     = (8-6)/20
                     = 2/20
Sacrificing ratio is 3:2
General reserve is ₹460000. To retain it in the balance sheet New partner will compensate his share in it to sacrificing partners.
C's share = 460000 x 1/4
                = 115000
A's share = 115000 x 3/5
                = 69000
B's share = 115000 x 2/5
                = 46000
So journal entry will be-
C's capital a/c  Dr.   ₹115000
    To A's capital a/c         ₹69000
    To B's capital a/c         ₹46000