Multiple choice

A And B were partners sharing profits in the ratio of 2:1. C is admitted for the 1/4thshare of profits, who brings 20,000 as capital. After all adjustments related to goodwill, revaluation of assets and reassessment of liabilities etc. Capital of A and B are 43,000 and 15,000 respectively: It is agreed that partners capitals should be according to the new profit sharing ratio. Determine the new capital of B

  1. 20,000

  2. 40,000

  3. 80,000

  4. 45,000
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

C brings 20,000 for 1/4 share. Total capital = 80,000. Remaining 3/4 share is 60,000. A and B share in 2:1, so B's share is 1/3 of 60,000 = 20,000.

AI explanation

To find B's new capital, first calculate the total capital of the firm by adding the adjusted capital of both partners and the new partner (43,000 + 15,000 + 20,000 = 78,000). C is admitted for a 1/4th share, leaving a remaining profit share of 3/4 for A and B. Since A and B originally shared profits in a 2:1 ratio, their new profit sharing ratio becomes 2/9 and 1/9 respectively. B's new capital is calculated as the total firm capital multiplied by his new share (78,000 x 1/9), which results in a new capital of 20,000 for B.

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