Q.D, E and F share profits and losses in the ratio 3:2:1. On F's retirement, their Balance Sheet showed a General Reserve of ₹30,000 and a credit balance of ₹12,000 in the Profit and Loss Account. Pass journal entries to close these two accounts, transferring them to the partners' Capital Accounts in their old profit-sharing ratio.

Both the General Reserve and the Profit and Loss credit balance were built up while F was still a partner, so all three partners — F included — share them in the old 3:2:1 ratio.

Both the General Reserve and the credit balance of the Profit and Loss Account represent profits earned by the firm in years BEFORE F's retirement, while all three partners — D, E and F — were together running the firm. They are therefore distributed to ALL THREE, in their old ratio of 3:2:1 (out of 6 parts).

Entry 1 — Closing the General Reserve:

D's share = ₹30,000 × 3/6 = ₹15,000. E's share = ₹30,000 × 2/6 = ₹10,000. F's share = ₹30,000 × 1/6 = ₹5,000. (Check: ₹15,000 + ₹10,000 + ₹5,000 = ₹30,000.)

(Being General Reserve transferred to all partners' capital accounts in the old ratio, 3:2:1)

Entry 2 — Closing the Profit and Loss Account (credit balance):

D's share = ₹12,000 × 3/6 = ₹6,000. E's share = ₹12,000 × 2/6 = ₹4,000. F's share = ₹12,000 × 1/6 = ₹2,000. (Check: ₹6,000 + ₹4,000 + ₹2,000 = ₹12,000.)

As with revaluation, students sometimes leave the retiring partner out of this distribution by mistake, carrying over the admission-chapter rule where the new partner gets none of the pre-admission reserves — on retirement, the ret …