Q.Vivin, Hari and Joy are partners sharing profits and losses equally. On 31-3-2017 Hari retired. On the date of retirement, the books of the firm showed a general reserve of ₹ 60,000. Pass the journal entries to transfer the general reserve.

On retirement, distribute the ₹60,000 general reserve to all three partners in the old equal ratio — ₹20,000 each.

Under the TN HSC Class-12 Accountancy rules for retirement of a partner, accumulated profits/reserves standing in the books are credited to ALL partners (including the retiring partner) in their old profit-sharing ratio, because the reserve was built out of profits earned while all three were partners. Here the old ratio is equal, so each share = 60,000 ÷ 3 = ₹20,000.

Journal Entry