A, B and C are partners in a firm sharing profits in the ratio of 2 : 2 : 1. D is admitted for 1/5th share in profits. He will bring ₹35,000 as his capital in the firm. The capitals of A, B and C after all the adjustments are ₹40,000, ₹35,000 and ₹30,000 respectively. What will be the share of goodwill of D?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) - ₹7,000.
D's capital = ₹35,000 for 1/5th share.
On D's share base total capital of the firm = 35,000 X 5
= ₹1,75,000
A, B and C after all the adjustments are ₹40,000, ₹35,000 and ₹30,000 respectively.
Total capital of A, B & C = 40,000 + 35,000 + 30,000
= ₹1,05,000
Goodwill = 1,75,000 - ( 1,05,000 + 35,000)
= 1,75,000 - 1,40,000
= ₹35,000
D's share in goodwill = 35,000 x 1/5
= ₹7,000