Practicing Success
A and B are partners in a firm sharing profits in the ratio 2 : 1. C is admitted into the firm with 1/4 share in profits. He will bring in ₹30,000 as capital and capitals of A and B are to be adjusted in the profit sharing ratio. The balance sheet of A and B as on March 31, 2017 (before C's admission ) was as under : Balance Sheet of A and B as at March 31,2017
Other terms of agreement are as under : 1. C will bring in ₹12,000 as his share of goodwill. 2. Building was valued at ₹45,000 and Machinery at ₹23,000 3. A provision for bad debts is to be created @6% in debtors. 4. The capital accounts A and B are to be adjusted by opening current accounts. |
Calculate the Fixed Capital of A and B respectively. |
₹60,000 and 30,000 ₹50,000 and 32,000 ₹63,000 and 38,840 ₹65,000 and 35,000 |
₹60,000 and 30,000 |
The correct answer is option 1- ₹60,000 and 30,000. Total capital of the firm on C's share basis = 30,000 x 4 New ratio = 2:1:1 A's new capital = 1,20,000 x 2/4 B's new capital = 1,20,000 x 1/4 |