Mohit, Neeraj and Sohan are partners in a firm sharing profits in the ratio of 2: 1: 1. Neeraj retires and Mohit and Sohan decided that the capital of the new firm will be fixed at ₹ 1,20,000. The capital accounts of Mohit and Sohan show a credit balance of ₹ 82,000 and ₹ 41,000 respectively after making all the adjustments. Calculate the actual cash to be paid off or to be brought in by the continuing partners in total.
Answer & explanation
Correct answer: option 3
The correct answer is option 3- ₹3000 paid off.
Old ratio = 2:1:1 (Mohan, Neeraj and Sohan)
Neeraj retires
As no other information is given so old ratio becomes the new ratio of remaining partners.
So, new ratio of Mohan & Sohan = 2:1
Capital fixed for the firm = ₹1,20,000
Capital of Mohan = 1,20,000 x 2/3
= ₹80,000
Capital of Sohan = 1,20,000 x 1/3
= ₹40,000
The capital accounts of Mohit and Sohan show a credit balance of ₹ 82,000 and ₹ 41,000 respectively after making all the adjustments. So, total old capital = 82,000 + 41,000 = 1,23,000.
So, capital withdrew by partners = 1,23,000 - 1,20,000
= 3,000
So, 3,000 is paid off to partners.