Practicing Success
Answer based on following information Azad and Babli are partners in a firm sharing profits and losses in the ratio of 2 : 1 Chintan is admitted into the firm with 1/4 share in profits. Chintan will bring in 30,000 as his capital and the capitals of Azad and Babli are to be adjusted in the profit sharing ratio. The Balance sheet of Azad and Babli as on December 31, 2016 (before Chintan's admission) was as follows:
(i) Chintan will bring in ₹12,000 as his share of goodwill premium. (ii) Buildings were valued at ₹45,000, and Machinery at ₹23,000. (iii) A provision for doubtful debts is to be created at 6% on debtors. (iv) The capital accounts of Azad and Babli are to be adjusted by opening current accounts. |
Compute new capital of Babli. |
₹30,000 ₹60,000 ₹45,000 ₹54,000 |
₹30,000 |
The correct answer is Option (1) → 30,000 Total capital of firm = $30,000 \times \frac{4}{1} = 1,20,000$ Capital of babli = $1,20,000 \times \frac{1}{4} = 30,000$ New Ratio Azad $\frac{2}{3} - \frac{2}{12}= \frac{6}{12}$ = 2/4 Babli $\frac{1}{3} - \frac{2}{12}= \frac{3}{12}$ = 1/4 Chintan $\frac{1}{4}$ $\frac{3}{12}$ = 1/4 |