Multiple choice

X and Y are partners who share net income in the ratio of 4:3 respectively and have Capital balances of Rs. 10,000 and 8,000 respectively. Z is admitted for 1/8 share and brings Rs. 6,000 for Capital and Rs. 4,200 for goodwill. The new Capital balances of X, Y and Z respectively are Rs.:

  1. 10,000, 8,000 and 10,200

  2. 12,100, 10,100 and 6,000

  3. 10,000, 8,000 and 6,000

  4. 12,400, 9,800 and 6,000
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Z brings 6000 capital and 4200 goodwill. Goodwill is shared by X and Y in 4:3 ratio: X gets 2400, Y gets 1800. New balances: X = 10000 + 2400 = 12400. Y = 8000 + 1800 = 9800. Z = 6000.

AI explanation

The new partner Z brings in Rs. 6,000 for capital and Rs. 4,200 for goodwill. The premium for goodwill is distributed between X and Y in their sacrificing ratio, which is their old profit sharing ratio of 4:3. X receives 4/7 of Rs. 4,200 which is Rs. 2,400, increasing his capital to Rs. 12,400. Y receives 3/7 of Rs. 4,200 which is Rs. 1,800, increasing his capital to Rs. 9,800, while Z's capital remains at his contributed amount of Rs. 6,000.

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