Multiple choice

A and B are partners with capitals of Rs. 3,000 each. They admit C as a partner with 1/4th share in the profits of the firm. C brings Rs. 4,800 as his share of Capital. The Profit & Loss A/c showed a credit balance of Rs. 2,400 as on date of admission of C. The amount of goodwill is _______.

  1. Rs. 6,000

  2. Rs. 19,200

  3. Rs. 13,200

  4. Rs. 8,400
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A Correct answer
AI explanation

The total capital of the new firm is calculated by dividing C's capital of Rs. 4,800 by his 1/4 share, which gives Rs. 19,200. The combined old capital of A and B is Rs. 6,000, increased by the Rs. 2,400 profit balance, giving an actual total capital of Rs. 8,400 before C's admission. The goodwill is the difference between the total firm capital of Rs. 19,200 and the net actual capital of Rs. 13,200, resulting in Rs. 6,000.

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