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CMA Intermediate · Financial Accounting · Amalgamation of Partnership Firms

Ravi and Sunil share profits equally in an old firm. Their capitals are ₹3,00,000 and ₹2,00,000, and there is a general reserve of ₹50,000. The realisation profit is ₹60,000. If Ravi's entire final balance is transferred to his capital in the new firm, what amount is credited to Ravi's capital in the new firm?

Ravi's capital in the new firm is ₹3,55,000. His old capital of ₹3,00,000 is increased by half of the ₹50,000 general reserve and half of the ₹60,000 realisation profit, since they share equally, giving ₹3,00,000 + ₹25,000 + ₹30,000.

  1. A₹3,55,000Correct
  2. B₹3,30,000
  3. C₹3,25,000
  4. D₹3,80,000

Explanation

Ravi's balance = capital 3,00,000 + half of reserve 25,000 + half of realisation profit 30,000 = 3,55,000. The 3,30,000 option omits the reserve; 3,25,000 omits the realisation profit; 3,80,000 credits the whole reserve to Ravi.

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