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:
|
Liabilities |
Amount (₹) |
Assets |
Amount (₹) |
|
Creditors |
8,000 |
Cash in hand |
2,000 |
|
Bills payable |
4,000 |
Cash in bank |
10,000 |
|
General reserve |
6,000 |
Sundry debtors |
8,000 |
|
Capital accounts: *Azad 50,000 *Babli 32,000 |
82,000 |
Stock
|
10,000
|
|
|
|
Furniture |
5,000 |
|
|
|
Machinery |
25,000 |
|
|
|
Building |
40,000 |
|
|
1,00,000 |
|
1,00,000 |
It was agreed that:
(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.
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → ₹30,000
When the capitals are to be adjusted in the new profit sharing ratio, the new partner’s capital is the base for the whole firm.
Chintan brings ₹30,000 for a 1/4 share, so total capital of the new firm = ₹30,000 × 4/1 = ₹1,20,000
New ratio: Chintan 1/4; the remaining 3/4 is shared by Azad and Babli in 2 : 1, so Azad = 2/3 × 3/4 = 1/2 and Babli = 1/3 × 3/4 = 1/4
New ratio Azad : Babli : Chintan = 2 : 1 : 1
Babli’s new capital = ₹1,20,000 × 1/4 = ₹30,000
Her capital before the adjustment is ₹38,840 (₹32,000 + ₹4,000 goodwill + ₹2,000 general reserve + ₹840 revaluation gain), so the excess ₹8,840 goes to her current account.
NCERT (2026-27 edition):
NCERT (2026-27 edition):
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