Moksh and Pran were partners in a firm sharing profits and losses in the ratio of 1 : 2. Their capitals were ₹ 5,00,000 and ₹ 3,00,000 respectively. They admitted Tushar as a new partner on 1st April, 2024 for 1/4th share in future profits. Tushar brought ₹ 4,00,000 as his share of capital. The goodwill of the firm on Tushar’s admission will be :

Question

When a partner brings capital at the time of admission, it is credited to:

Answer 1

Step 1: Tushar's Capital Contribution: ₹ 4,00,000.
Tushar's Profit Share: 1/4.

Step 2: Calculate Firm's Total Value using Capital Method:
\[\text{Total firm value} = \frac{4,00,000}{1/4} = ₹ 16,00,000\]

Step 3: Determine Existing Capital:
\[Moksh's Capital + Pran's Capital = ₹ 5,00,000 + ₹ 3,00,000 = ₹ 8,00,000\]

Step 4: Calculate Hidden Goodwill:
\[\text{Goodwill} = ₹ 16,00,000 - (₹ 8,00,000 + ₹ 4,00,000) = ₹ 4,00,000\]

The question requests the full firm value, which is ₹ 16,00,000, not the goodwill amount. Therefore:
\[\boxed{₹ 16,00,000}\]

Liabilities	Amount (₹)	Assets	Amount (₹)
Capital: Aryan	3,20,000	Machinery	3,90,000
Capital: Adya	2,40,000	Furniture	80,000
Workmen’s Compensation Reserve	20,000	Debtors	90,000
Bank Loan	60,000	Less: Provision for Doubtful Debts	(1,000)
Creditors	48,000	Net Debtors	89,000
		Stock	77,000
		Cash	32,000
		Profit and Loss A/c	20,000
Total	₹6,88,000	Total	₹6,88,000

Show Hint

The Correct Option is A

Solution and Explanation

Top Questions on Admission of a Partner

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