Question

Contingency Reserve is Rs. 20,000 and
contingent liability is Rs. 18,000. How would you deal
with the remaining contingency Reserve...........​

Answer 1

Answer:

Contingency Reserve is ₹ 20,000 and contingent liability is ₹ 18,000. How would you deal with the remaining contingency Reserve?

Answer 2

The remaining contingency reserve will be treated by crediting the same to the partner's capital account.

The journal entry for the same will be as,

Contingency Reserve account debited    20,000

   To Contingency liability A/C                  18,000

   To partner's capital account                  2,000