Question

X and Y were partners in a firm. They admitted Z as a new partner for 20% share in the profits. After all adjustments regarding general reserve, goodwill, gain or loss on revaluation, the balances in capital accounts of X and Y were ₹2,50,000 and ₹3,50,000 respectively. Z brought proportionate capital so as to give him 20% share in the profits. Calculate the amount of capital to be brought by Z.

Hint:

When a new partner brings proportionate capital, first calculate total capital of old partners and then find the total firm capital.

Answer 1

Capital of X = ₹2,50,000 Capital of Y = ₹3,50,000 \[ \text{Total Capital of X and Y} = 2,50,000 + 3,50,000 = 6,00,000 \] X and Y together represent 80% share of profits. \[ \text{Total Capital of the Firm} = \frac{6,00,000 \times 100}{80} = 7,50,000 \] Z’s share = 20% \[ \text{Capital to be brought by Z} = 20% \text{ of } 7,50,000 = 1,50,000 \]