Multiple choice

X and Y are partners sharing profits in the ratio of 2 : 1. They admit Z who agrees that his share of goodwill 15,000 be debited to his capital he is required to bring in. The future profit sharing ratio of X, Y and Z will be 2 : 3 : 3 respectively. Xs Capital account in lieu of goodwill will be credited by _______________.

  1. 10,000

  2. 15,000

  3. 16,533

  4. 16,667
Reveal answer Fill a bubble to check yourself
D Correct answer
AI explanation

X and Y's old ratio is 2/3 and 1/3, while the new ratio of X, Y, and Z is 2/8, 3/8, and 3/8. Z's goodwill share of 15,000 is distributed in the sacrificing ratio, where X sacrifices 2/3 minus 2/8 (10/24) and Y gains 3/8 minus 1/3 (1/24). X's capital account is credited by 15,000 multiplied by 10 divided by 9, yielding 16,667.

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