The correct answer is: B. Rs. 16,333
Explanation:
A and B are partners sharing profit and loss in 2 : 1 ratio. They admitted C who agreed to contribute Rs. 50,000 towards his capital. The future profit sharing ratio of A, B and C is 2 : 3 : 3 respectively. C agreed to transfer Rs. 15,000 for Goodwill from his capital account.
The amount of goodwill to be brought in by C = Rs. 50,000 x (3/8) = Rs. 22,500
The amount of goodwill to be adjusted from A’s capital account = Rs. 22,500 x (2/5) = Rs. 8,500
The amount of goodwill to be adjusted from B’s capital account = Rs. 22,500 x (3/5) = Rs. 14,000
A’s capital account will be credited by Rs. 16,333 = Rs. 8,500 + Rs. 15,000 – Rs. 15,000.
Here is a step-by-step solution:
- Calculate the amount of goodwill to be brought in by C:
Goodwill = New Share Capital x Old Share Ratio
Goodwill = Rs. 50,000 x (3/8) = Rs. 22,500
- Calculate the amount of goodwill to be adjusted from A’s capital account:
Goodwill to be adjusted = Goodwill brought in x Old Share Ratio
Goodwill to be adjusted = Rs. 22,500 x (2/5) = Rs. 8,500
- Calculate the amount of goodwill to be adjusted from B’s capital account:
Goodwill to be adjusted = Goodwill brought in x Old Share Ratio
Goodwill to be adjusted = Rs. 22,500 x (3/5) = Rs. 14,000
- Calculate the amount of goodwill to be credited to A’s capital account:
Goodwill to be credited = Goodwill to be adjusted + Goodwill brought in – Goodwill transferred
Goodwill to be credited = Rs. 8,500 + Rs. 15,000 – Rs. 15,000 = Rs. 16,333