X, Y and Z were partners in a firm sharing profits in the ratio of $\frac{1}{2}$,$\frac{1}{3}$ and $\frac{1}{6}$ respectively. Z decided to retire from the firm. On the date of his retirement, ‘Workmen Compensation Reserve’ of 1,20,000 was appearing in the Balance Sheet of the firm. The claim on account of Workmen Compensation was determined at ₹ 67,500. Excess of reserve amount over the claim will be:

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Credited to Partner’s Capital Accounts Explanation: When a partner retires, any excess amount in the Workmen Compensation Reserve over the claim is treated as a gain for the remaining partners. This excess amount is shared according to the partner’s profit-sharing ratio and credited to their capital accounts. In this case, the excess of ₹ 52,500 is credited to the capital accounts of X and Y in their profit-sharing ratio.

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