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.

₹3,680 and ₹8,840

The correct answer is option 2- ₹3,680 and ₹8,840.

CAPITAL ACCOUNT OF PARTNERS

C's SHARE =1/4

Total capital of the firm on C's share basis = 30,000 x 4
                                                              = 1,20,000

New ratio = 2:1:1

A's new capital = 1,20,000 x 2/4
                      = 60,000

B's new capital = 1,20,000 x 1/4
                       = 30,000