Answer the next 5 questions from the passage-
A, B and C are partners in a firm sharing profits in the ratio of 3:2:1. D is admitted into the firm for 1/4th share in profits, which he gets as 1/8th from A and 1/8th from B. The total capital of the firm is agreed upon as ₹1,20,000 and D is to bring in cash equivalent to 1/4th of this amount as his capital. The capitals of other partners are also to be adjusted in the ratio of their respective shares in profits. The capitals of A, B and C after all adjustments are ₹40,000, ₹35,000 and ₹30,000 respectively.
C will withdraw the capital amount after capital are adjusted in the ratio of their respective shares in profits. The amount is-
Answer & explanation
Correct answer: option 3
The correct answer is option 3- ₹10,000.
Old ratio = 3:2:1 (A, B & C)
D is admitted into the firm for 1/4th share in profits, which he gets as 1/8th from A and 1/8th from B.
New share = Old share - sacrificed share
New share of A = 3/6 - 1/8
= (12-3)/24
= 9/24
New share of B = 2/6 - 1/8
= (8-3)/24
= 5/24
New share of C = 1/6 (same as before)
D's share = 1/4
New ratio = 9/24 : 5/24 : 1/6 : 1/4
= 9/24 : 5/24 : 4/24 : 6/24
= 9:5:4:6
C's old capital after all adjustment = 30,000
Total capital of the firm = 1,20,000
C's share in the new capital = 1,20,000 x 4/24
= 20,000
Withdrawal of capital = 30,000 - 20,000
= 10,000
Journal entry for withdrawal-
C’s Capital A/c Dr. 10,000
To Cash A/c 10,000
(Excess amounts withdrawn by C)