Practicing Success
A and B are partners in a firm sharing profits in the ratio 2 : 1. C is admitted into the firm with 1/4 share in profits. He will bring in ₹30,000 as capital and capitals of A and B are to be adjusted in the profit sharing ratio. The balance sheet of A and B as on March 31, 2017 (before C's admission ) was as under : Balance Sheet of A and B as at March 31,2017
Other terms of agreement are as under : 1. C will bring in ₹12,000 as his share of goodwill. 2. Building was valued at ₹45,000 and Machinery at ₹23,000 3. A provision for bad debts is to be created @6% in debtors. 4. The capital accounts A and B are to be adjusted by opening current accounts. |
Calculate the current account balances of A and B respectively. |
₹13,860 and ₹6,840 ₹3,680 and ₹8,840 ₹9,680 and ₹4,840 ₹50,000 and ₹32,000 |
₹3,680 and ₹8,840 |
The correct answer is option 2- ₹3,680 and ₹8,840.
C's SHARE =1/4 Total capital of the firm on C's share basis = 30,000 x 4 New ratio = 2:1:1 A's new capital = 1,20,000 x 2/4 B's new capital = 1,20,000 x 1/4 |