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A and B shares profit and losses equally. They admit C as an equal partner and goodwill was valued as Rs. 30,000 (book value NIL). C is to bring in Rs. 20,000 as his capital and the necessary cash towards his share of Goodwill. Goodwill Account will not remain in the books. If profit on revaluation is Rs. 13,000, find the closing balance of the capital account.
- a)31,500:31,500:20,000.
- b)31,500:31,500:30,000.
- c)26,500:26,500:30,000.
- d)20,000:20,000:20,000
Correct answer is option 'A'. Can you explain this answer?
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A and B shares profit and losses equally. They admit C as an equal par...
**Solution:**
Given:
- A and B share profit and losses equally.
- C is admitted as an equal partner.
- Goodwill was valued at Rs. 30,000 (book value NIL).
- C brings in Rs. 20,000 as his capital and the necessary cash towards his share of Goodwill.
- Goodwill Account will not remain in the books.
- Profit on revaluation is Rs. 13,000.
To find: The closing balance of the capital account.
**Calculation:**
1. Calculation of Goodwill:
Since the Goodwill Account will not remain in the books, the amount of Goodwill will be shared by the partners in their new profit sharing ratio. Initially, A and B had equal profit sharing ratio, so the new profit sharing ratio after admitting C will be 1:1:1.
Since C is bringing in cash towards his share of Goodwill, the amount of cash brought in by C will be shared by A and B in their new profit sharing ratio. So, the cash brought in by C towards his share of Goodwill will be Rs. 10,000 (Rs. 20,000 * 1/2).
2. Calculation of New Capital Accounts:
The new capital accounts of A, B, and C will be their existing capital plus the cash they brought in towards their share of Goodwill.
- A's new capital = A's existing capital + cash brought in towards Goodwill = 0 + Rs. 10,000 = Rs. 10,000
- B's new capital = B's existing capital + cash brought in towards Goodwill = 0 + Rs. 10,000 = Rs. 10,000
- C's new capital = C's existing capital + cash brought in towards Goodwill = Rs. 20,000 + Rs. 10,000 = Rs. 30,000
3. Calculation of New Profit Sharing Ratio:
Since the new profit sharing ratio is 1:1:1, the profit of Rs. 13,000 will be shared equally among A, B, and C.
- Share of A = Rs. 13,000 * 1/3 = Rs. 4,333.33
- Share of B = Rs. 13,000 * 1/3 = Rs. 4,333.33
- Share of C = Rs. 13,000 * 1/3 = Rs. 4,333.33
4. Calculation of Closing Balance of Capital Accounts:
The closing balance of the capital accounts will be the sum of the new capital and the share of profit.
- A's closing balance = A's new capital + A's share of profit = Rs. 10,000 + Rs. 4,333.33 = Rs. 14,333.33
- B's closing balance = B's new capital + B's share of profit = Rs. 10,000 + Rs. 4,333.33 = Rs. 14,333.33
- C's closing balance = C's new capital + C's share of profit = Rs. 30,000 + Rs. 4,333.33 = Rs. 34,333.33
Hence, the closing balance of the capital accounts is Rs. 14,333.33:14,333.33:34,333.33, which
Given:
- A and B share profit and losses equally.
- C is admitted as an equal partner.
- Goodwill was valued at Rs. 30,000 (book value NIL).
- C brings in Rs. 20,000 as his capital and the necessary cash towards his share of Goodwill.
- Goodwill Account will not remain in the books.
- Profit on revaluation is Rs. 13,000.
To find: The closing balance of the capital account.
**Calculation:**
1. Calculation of Goodwill:
Since the Goodwill Account will not remain in the books, the amount of Goodwill will be shared by the partners in their new profit sharing ratio. Initially, A and B had equal profit sharing ratio, so the new profit sharing ratio after admitting C will be 1:1:1.
Since C is bringing in cash towards his share of Goodwill, the amount of cash brought in by C will be shared by A and B in their new profit sharing ratio. So, the cash brought in by C towards his share of Goodwill will be Rs. 10,000 (Rs. 20,000 * 1/2).
2. Calculation of New Capital Accounts:
The new capital accounts of A, B, and C will be their existing capital plus the cash they brought in towards their share of Goodwill.
- A's new capital = A's existing capital + cash brought in towards Goodwill = 0 + Rs. 10,000 = Rs. 10,000
- B's new capital = B's existing capital + cash brought in towards Goodwill = 0 + Rs. 10,000 = Rs. 10,000
- C's new capital = C's existing capital + cash brought in towards Goodwill = Rs. 20,000 + Rs. 10,000 = Rs. 30,000
3. Calculation of New Profit Sharing Ratio:
Since the new profit sharing ratio is 1:1:1, the profit of Rs. 13,000 will be shared equally among A, B, and C.
- Share of A = Rs. 13,000 * 1/3 = Rs. 4,333.33
- Share of B = Rs. 13,000 * 1/3 = Rs. 4,333.33
- Share of C = Rs. 13,000 * 1/3 = Rs. 4,333.33
4. Calculation of Closing Balance of Capital Accounts:
The closing balance of the capital accounts will be the sum of the new capital and the share of profit.
- A's closing balance = A's new capital + A's share of profit = Rs. 10,000 + Rs. 4,333.33 = Rs. 14,333.33
- B's closing balance = B's new capital + B's share of profit = Rs. 10,000 + Rs. 4,333.33 = Rs. 14,333.33
- C's closing balance = C's new capital + C's share of profit = Rs. 30,000 + Rs. 4,333.33 = Rs. 34,333.33
Hence, the closing balance of the capital accounts is Rs. 14,333.33:14,333.33:34,333.33, which
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A and B shares profit and losses equally. They admit C as an equal partner and goodwill was valued as Rs. 30,000 (book value NIL). C is to bring in Rs. 20,000 as his capital and the necessary cash towards his share of Goodwill. Goodwill Account will not remain in the books. If profit on revaluation is Rs. 13,000, find the closing balance of the capital account.a)31,500:31,500:20,000.b)31,500:31,500:30,000.c)26,500:26,500:30,000.d)20,000:20,000:20,000Correct answer is option 'A'. Can you explain this answer?
Question Description
A and B shares profit and losses equally. They admit C as an equal partner and goodwill was valued as Rs. 30,000 (book value NIL). C is to bring in Rs. 20,000 as his capital and the necessary cash towards his share of Goodwill. Goodwill Account will not remain in the books. If profit on revaluation is Rs. 13,000, find the closing balance of the capital account.a)31,500:31,500:20,000.b)31,500:31,500:30,000.c)26,500:26,500:30,000.d)20,000:20,000:20,000Correct answer is option 'A'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about A and B shares profit and losses equally. They admit C as an equal partner and goodwill was valued as Rs. 30,000 (book value NIL). C is to bring in Rs. 20,000 as his capital and the necessary cash towards his share of Goodwill. Goodwill Account will not remain in the books. If profit on revaluation is Rs. 13,000, find the closing balance of the capital account.a)31,500:31,500:20,000.b)31,500:31,500:30,000.c)26,500:26,500:30,000.d)20,000:20,000:20,000Correct answer is option 'A'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A and B shares profit and losses equally. They admit C as an equal partner and goodwill was valued as Rs. 30,000 (book value NIL). C is to bring in Rs. 20,000 as his capital and the necessary cash towards his share of Goodwill. Goodwill Account will not remain in the books. If profit on revaluation is Rs. 13,000, find the closing balance of the capital account.a)31,500:31,500:20,000.b)31,500:31,500:30,000.c)26,500:26,500:30,000.d)20,000:20,000:20,000Correct answer is option 'A'. Can you explain this answer?.
A and B shares profit and losses equally. They admit C as an equal partner and goodwill was valued as Rs. 30,000 (book value NIL). C is to bring in Rs. 20,000 as his capital and the necessary cash towards his share of Goodwill. Goodwill Account will not remain in the books. If profit on revaluation is Rs. 13,000, find the closing balance of the capital account.a)31,500:31,500:20,000.b)31,500:31,500:30,000.c)26,500:26,500:30,000.d)20,000:20,000:20,000Correct answer is option 'A'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about A and B shares profit and losses equally. They admit C as an equal partner and goodwill was valued as Rs. 30,000 (book value NIL). C is to bring in Rs. 20,000 as his capital and the necessary cash towards his share of Goodwill. Goodwill Account will not remain in the books. If profit on revaluation is Rs. 13,000, find the closing balance of the capital account.a)31,500:31,500:20,000.b)31,500:31,500:30,000.c)26,500:26,500:30,000.d)20,000:20,000:20,000Correct answer is option 'A'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A and B shares profit and losses equally. They admit C as an equal partner and goodwill was valued as Rs. 30,000 (book value NIL). C is to bring in Rs. 20,000 as his capital and the necessary cash towards his share of Goodwill. Goodwill Account will not remain in the books. If profit on revaluation is Rs. 13,000, find the closing balance of the capital account.a)31,500:31,500:20,000.b)31,500:31,500:30,000.c)26,500:26,500:30,000.d)20,000:20,000:20,000Correct answer is option 'A'. Can you explain this answer?.
Solutions for A and B shares profit and losses equally. They admit C as an equal partner and goodwill was valued as Rs. 30,000 (book value NIL). C is to bring in Rs. 20,000 as his capital and the necessary cash towards his share of Goodwill. Goodwill Account will not remain in the books. If profit on revaluation is Rs. 13,000, find the closing balance of the capital account.a)31,500:31,500:20,000.b)31,500:31,500:30,000.c)26,500:26,500:30,000.d)20,000:20,000:20,000Correct answer is option 'A'. Can you explain this answer? in English & in Hindi are available as part of our courses for CA Foundation.
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Here you can find the meaning of A and B shares profit and losses equally. They admit C as an equal partner and goodwill was valued as Rs. 30,000 (book value NIL). C is to bring in Rs. 20,000 as his capital and the necessary cash towards his share of Goodwill. Goodwill Account will not remain in the books. If profit on revaluation is Rs. 13,000, find the closing balance of the capital account.a)31,500:31,500:20,000.b)31,500:31,500:30,000.c)26,500:26,500:30,000.d)20,000:20,000:20,000Correct answer is option 'A'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of
A and B shares profit and losses equally. They admit C as an equal partner and goodwill was valued as Rs. 30,000 (book value NIL). C is to bring in Rs. 20,000 as his capital and the necessary cash towards his share of Goodwill. Goodwill Account will not remain in the books. If profit on revaluation is Rs. 13,000, find the closing balance of the capital account.a)31,500:31,500:20,000.b)31,500:31,500:30,000.c)26,500:26,500:30,000.d)20,000:20,000:20,000Correct answer is option 'A'. Can you explain this answer?, a detailed solution for A and B shares profit and losses equally. They admit C as an equal partner and goodwill was valued as Rs. 30,000 (book value NIL). C is to bring in Rs. 20,000 as his capital and the necessary cash towards his share of Goodwill. Goodwill Account will not remain in the books. If profit on revaluation is Rs. 13,000, find the closing balance of the capital account.a)31,500:31,500:20,000.b)31,500:31,500:30,000.c)26,500:26,500:30,000.d)20,000:20,000:20,000Correct answer is option 'A'. Can you explain this answer? has been provided alongside types of A and B shares profit and losses equally. They admit C as an equal partner and goodwill was valued as Rs. 30,000 (book value NIL). C is to bring in Rs. 20,000 as his capital and the necessary cash towards his share of Goodwill. Goodwill Account will not remain in the books. If profit on revaluation is Rs. 13,000, find the closing balance of the capital account.a)31,500:31,500:20,000.b)31,500:31,500:30,000.c)26,500:26,500:30,000.d)20,000:20,000:20,000Correct answer is option 'A'. Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice A and B shares profit and losses equally. They admit C as an equal partner and goodwill was valued as Rs. 30,000 (book value NIL). C is to bring in Rs. 20,000 as his capital and the necessary cash towards his share of Goodwill. Goodwill Account will not remain in the books. If profit on revaluation is Rs. 13,000, find the closing balance of the capital account.a)31,500:31,500:20,000.b)31,500:31,500:30,000.c)26,500:26,500:30,000.d)20,000:20,000:20,000Correct answer is option 'A'. Can you explain this answer? tests, examples and also practice CA Foundation tests.
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