A and B are partners sharing profits and losses in the ratio of 3:2. A’s…
2019
A and B are partners sharing profits and losses in the ratio of 3:2. A’s capital is ₹30,000 and B’s capital is ₹15,000. They admit C as a new partner with a 1/5th share in profits. What amount of capital should C bring in?
Answer: C. 11,250 — Concept: When a new partner is admitted for a fixed profit share and is asked to bring in capital proportional to that share, the retiring partners' combined…
- A.
9000
- B.
14,500
- C.
11,250
- D.
12,000
Attempted by 22 students.
Show answer & explanation
Correct answer: C
Concept: When a new partner is admitted for a fixed profit share and is asked to bring in capital proportional to that share, the retiring partners' combined capital stands for the share they continue to hold. So: Total firm capital = (Old partners' combined capital) / (share the old partners retain), and the new partner's capital = that total × the new partner's own share.
Application:
A's capital = ₹30,000 and B's capital = ₹15,000, so their combined capital = ₹30,000 + ₹15,000 = ₹45,000.
C is admitted with a 1/5 share in profits, so A and B together retain the remaining 4/5 share.
Their combined ₹45,000 therefore represents 4/5 of the total firm capital.
Total firm capital = (₹45,000 × 5) / 4 = ₹56,250.
C's required capital = 1/5 of the total = (1/5) × ₹56,250 = ₹11,250.
Cross-check: Adding the three capitals back: ₹30,000 + ₹15,000 + ₹11,250 = ₹56,250, and C's portion of this total, ₹11,250 ÷ ₹56,250, reduces to exactly 1/5 — matching C's agreed profit share.