Question

Following is the balance sheet of A, B, and C who share profits and losses of the business in the ratio of 3:2:1.

Additional Information:
a. On 1st April, 2021, they admitted D as a partner for 1/4th for which he brought ₹1,20,000 as his capital and ₹30,000 as a share of goodwill.
b.The value of furniture has increased by 10%.
c. Market value of investments brought down to ₹2,00,000.

Calculate the amount of investment fluctuation reserve to be credited to C's capital account:

[2 marks]

• A. ₹5,000
• B. ₹9,200
• C. ₹700
• D. ₹2,100

Answer 1

The correct option is C ₹700

$$\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F.}& \text{Amt. (Dr.)}& \text{Amt. (Cr.)}\\ & & & & & \\ & \text{Investment Fluctuation Reserve A/c}& \text{Dr.}& & \text{9,200}& \\ & \text{To Investments A/c}& & & & \text{5,000*}\\ & \text{To A's Capital A/c}& & & & \text{2,100}\\ & \text{To B's Capital A/c}& & & & \text{1,400}\\ & \text{To C's Capital A/c}& & & & \text{700}\\ & & & & & \end{array}$$
*Fall in the market value of investments.