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X and Y are partners sharing profits in the ratio of 3 : 1. They admit Z as a partner who pays Rs. 4,000 as Goodwill the new profit sharing ratio being 2 : 1 : 1 among X, Y and Z respectively. The amount of goodwill will be credited to :
- a)X and Y as Rs. 3,000 and Rs. 1,000 respectively.
- b)X only
- c)Y only.
- d)None of the above.
Correct answer is option 'B'. Can you explain this answer?
Verified Answer
X and Y are partners sharing profits in the ratio of 3 : 1. They admit...
Let's break down the given information to find the answer:
Initial Ratio:
- X and Y share profits in the ratio of 3:1.
Admission of Z:
- Z pays Rs. 4,000 as Goodwill.
- The new profit sharing ratio is 2:1:1 among X, Y, and Z.
To find out who the goodwill amount will be credited to, we need to calculate the new capital of each partner after Z's admission.
Let's assume X's capital after Z's admission is Rs. X1 and Y's capital after Z's admission is Rs. Y1.
According to the given information, the new capital will be in the ratio of 2:1:1 among X, Y, and Z. So, we can write the equation as:
X1 : Y1 : 4000 = 2 : 1 : 1
Now, solve the equation to find the values of X1 and Y1.
- X1 = (2/4) * 4000 = 2000
- Y1 = (1/4) * 4000 = 1000
Conclusion:
The amount of goodwill, Rs. 4,000, will be credited only to X's capital after Z's admission. Therefore, the correct answer is B: X only.
Most Upvoted Answer
X and Y are partners sharing profits in the ratio of 3 : 1. They admit...
S/R of X and Y.....X=3/4-2/4=1/4.....Y=1/4-1/4=0/4....so X is credit because X is sacrificing partner...
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X and Y are partners sharing profits in the ratio of 3 : 1. They admit...
Understanding Goodwill and Profit Sharing Ratios
When Z is admitted as a new partner, he pays Rs. 4,000 as goodwill. The existing partners X and Y have a profit-sharing ratio of 3:1, which changes to 2:1:1 with the inclusion of Z.
Calculation of Goodwill Distribution
1. Existing Profit Sharing Ratio:
- X: 3 parts
- Y: 1 part
- Total: 4 parts
2. New Profit Sharing Ratio:
- X: 2 parts
- Y: 1 part
- Z: 1 part
- Total: 4 parts
3. Change in Profit Sharing Ratios:
- X's sacrifice = Old share - New share = (3/4) - (2/4) = 1/4
- Y's sacrifice = Old share - New share = (1/4) - (1/4) = 0
Calculating Goodwill Amounts
- Since Z paid Rs. 4,000 as goodwill, it will be distributed based on the sacrifices made by the existing partners.
- Only X has made a sacrifice of 1/4 of the total profit.
Goodwill Credited to X
- X’s share of goodwill = Rs. 4,000 * (1/4) = Rs. 1,000
- Since Y has not sacrificed anything, he does not receive any goodwill.
Conclusion
Thus, the correct answer is option 'B': the entire amount of goodwill (Rs. 4,000) will be credited to X only, as Y has not sacrificed any part of his profit share.
This understanding of goodwill and the distribution process is crucial for proper partnership accounting and maintaining fair profit-sharing among partners.
When Z is admitted as a new partner, he pays Rs. 4,000 as goodwill. The existing partners X and Y have a profit-sharing ratio of 3:1, which changes to 2:1:1 with the inclusion of Z.
Calculation of Goodwill Distribution
1. Existing Profit Sharing Ratio:
- X: 3 parts
- Y: 1 part
- Total: 4 parts
2. New Profit Sharing Ratio:
- X: 2 parts
- Y: 1 part
- Z: 1 part
- Total: 4 parts
3. Change in Profit Sharing Ratios:
- X's sacrifice = Old share - New share = (3/4) - (2/4) = 1/4
- Y's sacrifice = Old share - New share = (1/4) - (1/4) = 0
Calculating Goodwill Amounts
- Since Z paid Rs. 4,000 as goodwill, it will be distributed based on the sacrifices made by the existing partners.
- Only X has made a sacrifice of 1/4 of the total profit.
Goodwill Credited to X
- X’s share of goodwill = Rs. 4,000 * (1/4) = Rs. 1,000
- Since Y has not sacrificed anything, he does not receive any goodwill.
Conclusion
Thus, the correct answer is option 'B': the entire amount of goodwill (Rs. 4,000) will be credited to X only, as Y has not sacrificed any part of his profit share.
This understanding of goodwill and the distribution process is crucial for proper partnership accounting and maintaining fair profit-sharing among partners.
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X and Y are partners sharing profits in the ratio of 3 : 1. They admit Z as a partner who pays Rs. 4,000 as Goodwill the new profit sharing ratio being 2 : 1 : 1 among X, Y and Z respectively. The amount of goodwill will be credited to :a)X and Y as Rs. 3,000 and Rs. 1,000 respectively.b)X onlyc)Y only.d)None of the above.Correct answer is option 'B'. Can you explain this answer? for CA Foundation 2025 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about X and Y are partners sharing profits in the ratio of 3 : 1. They admit Z as a partner who pays Rs. 4,000 as Goodwill the new profit sharing ratio being 2 : 1 : 1 among X, Y and Z respectively. The amount of goodwill will be credited to :a)X and Y as Rs. 3,000 and Rs. 1,000 respectively.b)X onlyc)Y only.d)None of the above.Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for CA Foundation 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for X and Y are partners sharing profits in the ratio of 3 : 1. They admit Z as a partner who pays Rs. 4,000 as Goodwill the new profit sharing ratio being 2 : 1 : 1 among X, Y and Z respectively. The amount of goodwill will be credited to :a)X and Y as Rs. 3,000 and Rs. 1,000 respectively.b)X onlyc)Y only.d)None of the above.Correct answer is option 'B'. Can you explain this answer?.
X and Y are partners sharing profits in the ratio of 3 : 1. They admit Z as a partner who pays Rs. 4,000 as Goodwill the new profit sharing ratio being 2 : 1 : 1 among X, Y and Z respectively. The amount of goodwill will be credited to :a)X and Y as Rs. 3,000 and Rs. 1,000 respectively.b)X onlyc)Y only.d)None of the above.Correct answer is option 'B'. Can you explain this answer? for CA Foundation 2025 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about X and Y are partners sharing profits in the ratio of 3 : 1. They admit Z as a partner who pays Rs. 4,000 as Goodwill the new profit sharing ratio being 2 : 1 : 1 among X, Y and Z respectively. The amount of goodwill will be credited to :a)X and Y as Rs. 3,000 and Rs. 1,000 respectively.b)X onlyc)Y only.d)None of the above.Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for CA Foundation 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for X and Y are partners sharing profits in the ratio of 3 : 1. They admit Z as a partner who pays Rs. 4,000 as Goodwill the new profit sharing ratio being 2 : 1 : 1 among X, Y and Z respectively. The amount of goodwill will be credited to :a)X and Y as Rs. 3,000 and Rs. 1,000 respectively.b)X onlyc)Y only.d)None of the above.Correct answer is option 'B'. Can you explain this answer?.
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