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CMA Intermediate · Financial Accounting · Admission of Partner

P and Q share profits 2:1 with capitals of Rs 4,00,000 and Rs 2,00,000. R is admitted for a 1/4 share and is to bring capital proportionate to that share of the new firm's total capital. The old partners' combined capital after adjusting for goodwill and revaluation is to remain Rs 6,00,000. What capital must R bring in?

R must bring Rs 2,00,000. The old partners' Rs 6,00,000 represents three-fourths of the new firm, so the total capital is Rs 8,00,000. R's one-fourth share therefore equals Rs 2,00,000. Taking one-fourth of the old capital would wrongly give Rs 1,50,000.

  1. ARs 2,00,000Correct
  2. BRs 1,50,000
  3. CRs 2,40,000
  4. DRs 1,80,000

Explanation

The old partners hold 3/4 of the firm, so 3/4 of total capital is Rs 6,00,000. Total capital is Rs 8,00,000. R's 1/4 share is Rs 2,00,000. Rs 1,50,000 wrongly takes 1/4 of Rs 6,00,000.

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