Answer the next 5 questions from the passage-
A, B and C are partners in a firm sharing profits in the ratio of 3:2:1. D is admitted into the firm for 1/4th share in profits, which he gets as 1/8th from A and 1/8th from B. The total capital of the firm is agreed upon as ₹1,20,000 and D is to bring in cash equivalent to 1/4th of this amount as his capital. The capitals of other partners are also to be adjusted in the ratio of their respective shares in profits. The capitals of A, B and C after all adjustments are ₹40,000, ₹35,000 and ₹30,000 respectively.
D will bring in cash as his capital -
Answer & explanation
Correct answer: option 1
The correct answer is option 1- ₹30,000.
The total capital of the firm is agreed upon as ₹1,20,000 and D is to bring in cash equivalent to 1/4th of this amount as his capital.
D's capital = 1,20,000 x 1/4
= 30,000
Journal entry for this-
Cash A/c Dr. 30,000
To D’s Capital A/c 30,000
(Capital brought in by D)