Question

Give the journal entry to distribute investment fluctuation reserve of rupees 40,000 at the time of

admission of Sachin for 20% share of profit When Investments (market value rupees 1,90,000)

appear at rupees 2,00,000. The firm has two old partners Sunil and Dilip.​

Answer 1

Answer:

Investment fluctuations reserve Dr 40000

To investment. 10000

To Sunil'capital a/c. 15000

To Dilip 'capital a/c. 15000

Explanation:

as profit sharing ratio of old partner is not given so we assume it equal

loss on investment if rs. 10000 is covered from reserve and remaining reserve is distributed among partner