Question 42 Chapter 5 of +2-A
42. A and B are partners in a firm with capital of 60,000 and 1,20,000
respectively. They decide to admit C into the partnership for 1/4th share in the future profits. C is to bring in a sum of 70,000 as his capital. Calculate amount of goodwill.
Total Capital of the firm on the Basis of C’s Capital
Total Capital of the firm = C’s Capital * Reciprocal of his share
| = | 70,000 | * | 4 |
| 1 | |||
| = | 2,80,000 |
Actual Capital of Firm = Capital of Old Partners + Incoming Partner’s Capital
| = | 60,000 + 1,20,000 + 70,000 |
| = | 2,50,000 |
| Goodwill | = | Total Capital of the firm on basis of Cs Capital |
- Actual Capital of Firm |
| = | 2,80,000 | +2,50,000 | |
| = | 30,000 |
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Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
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