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A, B and C are partners sharing profits in the ratio of 2:2:1. On retirement of B, goodwill was valued as Rs. 30,000. Find the contribution of A and C to compensate B: 
  • a)
    Rs. 20,000 and Rs. 10,000
  • b)
    Rs. 8,000 and Rs. 4,000
  • c)
    No contribution 
  • d)
    Rs. 15,000 and Rs. 15,000
Correct answer is option 'B'. Can you explain this answer?
Most Upvoted Answer
A, B and C are partners sharing profits in the ratio of 2:2:1. On reti...
Understanding the Profit Sharing Ratio
A, B, and C share profits in the ratio of 2:2:1, which means:
- A's share = 2 parts
- B's share = 2 parts
- C's share = 1 part
Calculating Total Parts
The total parts in the profit sharing ratio are:
- Total = 2 + 2 + 1 = 5 parts
Goodwill Valuation
On B's retirement, the goodwill is valued at Rs. 30,000.
Calculating B's Share of Goodwill
To find B's share of goodwill:
- B's share = (B's parts/Total parts) * Goodwill
- B's share = (2/5) * 30,000 = Rs. 12,000
Compensation by A and C
A and C must compensate B for his share of goodwill. Since A and C continue in the business, they must pay B Rs. 12,000.
Calculating A and C's Contributions
They will contribute to B's compensation in their profit-sharing ratio:
- Contribution of A = (A's parts/Remaining parts) * B's share
- Contribution of C = (C's parts/Remaining parts) * B's share
Since A and C are now sharing the total of 3 parts (2 for A and 1 for C):
- Contribution of A = (2/3) * 12,000 = Rs. 8,000
- Contribution of C = (1/3) * 12,000 = Rs. 4,000
Conclusion
Thus, the contributions of A and C to compensate B are:
- A: Rs. 8,000
- C: Rs. 4,000
This confirms that the correct answer is option 'B'.
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A, B and C are partners sharing profits in the ratio of 2:2:1. On retirement of B, goodwill was valued as Rs. 30,000. Find the contribution of A and C to compensate B:a)Rs. 20,000 and Rs. 10,000b)Rs. 8,000 and Rs. 4,000c)No contributiond)Rs. 15,000 and Rs. 15,000Correct answer is option 'B'. Can you explain this answer?
Question Description
A, B and C are partners sharing profits in the ratio of 2:2:1. On retirement of B, goodwill was valued as Rs. 30,000. Find the contribution of A and C to compensate B:a)Rs. 20,000 and Rs. 10,000b)Rs. 8,000 and Rs. 4,000c)No contributiond)Rs. 15,000 and Rs. 15,000Correct answer is option 'B'. 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, B and C are partners sharing profits in the ratio of 2:2:1. On retirement of B, goodwill was valued as Rs. 30,000. Find the contribution of A and C to compensate B:a)Rs. 20,000 and Rs. 10,000b)Rs. 8,000 and Rs. 4,000c)No contributiond)Rs. 15,000 and Rs. 15,000Correct answer is option 'B'. 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, B and C are partners sharing profits in the ratio of 2:2:1. On retirement of B, goodwill was valued as Rs. 30,000. Find the contribution of A and C to compensate B:a)Rs. 20,000 and Rs. 10,000b)Rs. 8,000 and Rs. 4,000c)No contributiond)Rs. 15,000 and Rs. 15,000Correct answer is option 'B'. Can you explain this answer?.
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