Amar and Barun are partners, sharing profits in the ratio of 3:1. Charu is admitted into the firm for 1/5 share of profits. Charu brought in Rs. 30,000 in respect of her capital. The capitals of old partners Amar and Barun, after all adjustments relating to goodwill, revaluation of assets and liabilities, etc., are Rs. 65,000 and Rs. 15,000 respectively. It is agreed that partners' capitals should be according to the new profit sharing ratio. Calculate the amount brought in/withdrawn by Amar to adjust his capital according to the new profit sharing ratio.
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Cash brought - Rs. 25,000
When the partners agree that their capitals must follow the new profit sharing ratio, the incoming partner’s capital is taken as the base: his capital stands for his share, so the whole firm’s capital follows from it.
- Charu takes 1/5, so Amar and Barun keep 4/5 between them in 3 : 1 → Amar 3/5, Barun 1/5. New ratio 3 : 1 : 1.
- Charu’s Rs. 30,000 is 1/5 of the firm’s capital, so total capital = 30,000 × 5 = Rs. 1,50,000.
- Amar’s capital should be 3/5 × 1,50,000 = Rs. 90,000.
- His adjusted balance is Rs. 65,000, so he is short by 90,000 − 65,000 = Rs. 25,000, which he brings in.
Barun’s figure is worth checking the same way: he should hold 1/5 × 1,50,000 = Rs. 30,000 against his Rs. 15,000, so he brings in Rs. 15,000. That is the figure sitting in Options (2) and (4) — the right amount against the wrong partner.
Note: This is NCERT’s own Illustration on adjusting capitals, wording and all; NTA changed the ratio, the share and the four amounts.
NCERT Extract
