$A$ and $B$ were partners in a firm sharing profit in $4 : 3$ ratio. On $1^{s t}$ April,2018, they admitted $C$ as a new partner. On the date of $C^{'} s$ admission, the Balance Sheet of $A$ and $B$ showed a General Reserve of $R s . 84, 000$ and a debit balance of $R s . 8, 400$ in the 'Profit and Loss Account'. Pass necessary Journal entries.

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Solution

(i) General Reserve a/c... Dr. 84000
To A's Capital a/c 48000
To B's Capital a/c 36000
(Being general reserve transferred to the partner's capital accounts in the ratio of 4:3)

(ii) A's Capital a/c... Dr. 4800
B's Capital a/c... Dr. 3600
To Profit and loss a/c 8400
(Being adjustment of profit and loss account in the ratio of 4:3)

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