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Question

A,B and C are partners having capitals of Rs.3,00,000,Rs.2,00,000 and Rs.1,00,000. They admit D as a partner for 1/5th share on 1stApril,2018. On this day, the firm has reserve of Rs.60,000. A and B demand that reserve should be shared in proportion of capital whereas C is of the opinion that it should be shared equally as they do not have partnership deed. A and B agree to Cs viewpoint.
What argument must have been put by C that convinced both A and B?

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Solution

C is correct. When there is no partnership agreement, reserves are shared equally among the partners. According to Section 24 of the Partnership Act, 1890, if there is no partnership deed in place, all profits and reserves are to be shared equally among the partners.

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