Multiple choice

A and B are partners sharing profits and losses in the ratio of $3: 2$. They admit C into the partnership for $1/4$th share. C brings in $Rs.6,000$ for capital and the requisite amount of premium in cash. The goodwill of the firm is valued at $Rs.9,600$. Partners withdrew their share of goodwill in cash. A and B withdrew ________.

  1. $Rs.1,440$ and $Rs.960$
  2. $Rs.960$ and $Rs.1,440$
  3. $Rs.1,200$ and $Rs.1,200$

  4. None of these
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Goodwill of the firm = 9,600. C's share = 1/4 * 9,600 = 2,400. A and B share this premium in their sacrifice ratio. Since no new ratio is given, they sacrifice in their old ratio 3:2. A gets 3/5 * 2,400 = 1,440. B gets 2/5 * 2,400 = 960.

AI explanation

C's share in the profits is 1/4, so his share of the Rs. 9,600 goodwill is Rs. 2,400. Since C brought this premium in cash and the old partners withdrew their share, the Rs. 2,400 is distributed between A and B in their old profit sharing ratio of 3:2. A receives 3/5 of Rs. 2,400, which is Rs. 1,440, and B receives 2/5 of Rs. 2,400, which is Rs. 960.

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