Multiple choice

Passage

Directions: Read the following passage carefully: Sterling enterprises is a partnership business with Ryan, Williams, and Sania as partners engaged in production and sales of electrical items and equipment. Their capital contributions were Rs. 50,00,000, Rs. 50,00,000, and Rs. 80,00,000 respectively with the profit sharing ratio of 5 : 5 : 8. To expand their business, they decided to bring in sufficient cash to double their respective capitals. This was duly followed by Ryan and Williams but due to unavoidable reasons Sania could not do so and ultimately it was agreed that to bridge the shortfall in the required capital, a new partner should be admitted who would bring in the amount that Sania could not bring and that the new partner would get share of profits equal to half of Sania's share which would be sacrificed by Sania only. Consequent to this agreement, Ejaz was admitted and he brought in the required capital and Rs. 30,00,000 as premium for goodwill.

What is the amount of capital brought in by the new partner Ejaz?

  1. Rs. 50,00,000

  2. Rs. 80,00,000

  3. Rs. 40,00,000

  4. Rs. 30,00,000
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Sania's original capital was 80,00,000. To double it, she needed 80,00,000 more. Since she could not bring it, Ejaz was admitted to bring the amount Sania could not bring. Thus, Ejaz brought 80,00,000.

AI explanation

Sania's initial capital is Rs. 80,00,000, and the plan was to double it, meaning she needed to bring in an additional Rs. 80,00,000. Since she could not contribute this amount, the new partner Ejaz was admitted to bring in the exact shortfall. Therefore, the capital brought in by Ejaz is Rs. 80,00,000.

Keep practicing — related questions