Multiple choice

P and Q are partnership sharing Profit it in the ratio of 2: 1. R is admitted to the partnership with effect from 1st April on the term that he will bring Rs. 40,000 as his capital for 1/4th share and pays Rs. 18,000 for goodwill, half of which is to be withdrawn by P and Q. If profit on revaluation is Rs. 12,000 and the opening Capital of P are Rs. 80,000 and of Q is Rs. 60,000, the closing balances of capital accounts will be in the ratio of ________.

  1. 94,000 : 67,000 : 40,000

  2. 100,000 : 70,000 : 40,000

  3. 80,000 : 60,000 : 20,000

  4. 82,000 : 61,000 : 58,000
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The revaluation profit gives P 8000 and Q 4000. After goodwill is credited and half is withdrawn, the net goodwill additions are 6000 for P and 3000 for Q, while R contributes 40000. The closing capitals are therefore 94000, 67000, and 40000, giving the stated ratio.

AI explanation

The revaluation profit of Rs. 12,000 is distributed to P and Q in their old profit sharing ratio of 2 : 1, increasing P's capital by Rs. 8,000 and Q's capital by Rs. 4,000. The goodwill of Rs. 18,000 is similarly distributed, increasing P's capital by Rs. 12,000 and Q's by Rs. 6,000, but half of this total amount, which is Rs. 9,000, is immediately withdrawn, reducing P's capital by Rs. 6,000 and Q's capital by Rs. 3,000. P's closing capital becomes the starting Rs. 80,000 plus Rs. 8,000 plus Rs. 12,000 minus Rs. 6,000, equaling Rs. 94,000. Q's closing capital becomes the starting Rs. 60,000 plus Rs. 4,000 plus Rs. 6,000 minus Rs. 3,000, equaling Rs. 67,000, resulting in closing capital balances of Rs. 94,000, Rs. 67,000, and Rs. 40,000.

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