Question

Hari, Sunil and Anil are partners sharing profits equally which they changed to 2:2:1 w.e.f. 1st April, 2021. Their capitals on that date were 35,00,000 each and balance in Current Accounts * 40,000 (Cr.); 30,000 (Cr.) and 20,000 (Dr.) respectively. On that date, balances also existed in the books as follows: General Reserve 1,00,000; Workmen Compensation Reserve 1,00,000 (Workmen Claim 50,000). General Reserve and Workmen Compensation Reserve credited equally to their Capital Accounts will be

а 1,50,000.

b 2,00,000.

c 2,50,000.

d None of these.​

Answer 1

The correct answer is option (c) 2,50,000.

Explanation:

• General Reserve and Workmen Compensation Reserve credited equally to their Capital Accounts will be 2,50,000.
• As, the amount will be calculated by simply adding General Reserve and Workman's Compensation = 1,00,000 + 1,50,000.
• Workmen Compensation Reserve refers to a reserve created out of firm's profits to meet possible liability to pay compensation to employees, if it arises.
• General reserve are those reserve which are generally created without any specific purpose.
• Hence, the correct answer is option c i.e 2,50,000.