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.
Capital of Chintan = 1/4
Capital introduced by him = 30,000
Total capital of firm on basis of Chinatn's capital = 30,000 x 4/1
= 1,20,000
Old ratio = 2:1 (Azad and Babli)
Let total share = 1
Chintan share = 1/4
Remaining share = 1- 1/4
= 3/4
This 3/4 is shared between old partners in their old ratio.
Babli new share = 3/4 x 1/3
= 3/12 or 1/4
Babli share in new capital = 1,20,000 x 1/4
= 30,000