Indu, Vijay, and Pawan were partners in a firm sharing profits in the ratio of 4 : 3 : 3. They admitted Subhash into partnership with effect from 1st April, 2022. New profit sharing ratio among Indu, Vijay, Pawan, and Subhash will be 3 : 3 : 2 : 2. An extract of their Balance Sheet as at 31st March, 2022, is given below: Liabilities Amount (₹) Assets Amount (₹) Investment Fluctuation Reserve 80,000 Investment (Market Value ₹ 80,000) 90,000 Which of the following is the correct accounting treatment of ‘investment fluctuation reserve’ at the time of Subhash’s admission?

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JOURNAL Date Particulars L.F. Debit Amount (₹) Credit Amount (₹) Investment Fluctuation Reserve A/c ...Dr. 80,000 To Investments A/c 10,000 To Indu’s Capital A/c 28,000 To Vijay’s Capital A/c 21,000 To Pawan’s Capital A/c 21,000 Explanation: The balance is distributed among the partners by the old profit-sharing ratio from the Investment Fluctuation Reserve, with the amount of the value fall being transferred to the Investments Account.

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