Question
A and B are partners in a firm sharing profits in the ratio of 4 : 3. On March 31, 2016 their Balance Sheet showed
A and B are partners in a firm sharing profits in the ratio of 4 : 3. On March 31, 2016 their Balance Sheet showed a General Reserve of Rs. 35,000. On that date they decided to admit Sewak as a new partner and the new profit-sharing ratio will be 5 : 3 : 2. Record necessary journal entries in the books of the firm under the following circumstances :
(i) When they want to transfer the general reserve to their capital accounts.
(ii) When they don't want to transfer general reserve in their capital accounts but prefer to record and adjustment entry for the same.
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