Admission of a Partnership

This query is : Resolved

Girish S Khanvilkar (Querist)
Follow

04 April 2010 Dear Sir

A and B who share profits and losses in the ratio 3:2 has the following balance capital of A Rs.50000; capital of B Rs.30000; Reserve fund Rs.15000. They admit C as a partner who contribute to the firm Rs.25000 for 1/6th shares in partnership. If C is to purchase 1/6th shares in the partnership from the exiting partner A and B in the ratio 3:2 for Rs.25000. find closing capital of C

Ani : 19000

Please How to findClosing capital of C
Regards
Girish

shakuntala chhangani

shakuntala chhangani (Expert)
Follow

08 April 2010 my dear, there is a printing mistake in the question. Make it 1/5 instead of 1/6. you will get the answer of Rs. 19,000.
In the question it is given that C is purchasing 1/5 share from the existing partners, it means total net worth of the firm after admission is same as what it was before admission of C i.e.50,000+30,000+15,000 = Rs. 95,000
Now, C 's share is 1/5of 95,000 i.e. Rs. 19,000 and balance Rs. 6,000 is goodwill brought in cash by C
Regards, CA Shakuntala Chhangani