Question

X and Y are partners sharing profits and losses in the ratio of 3 : 1. Z is admitted into partnership for 1$/5^{\text{th}}$ share in profits for which he brings ₹ 25,000 as his share of capital. Hence, the adjusted capital of X and Y will be:

[0.88 marks]

• A. X - ₹75,000, Y - ₹25,000
• B. X - ₹40,000, Y - ₹8,000
• C. X - ₹45,000, Y - ₹15,000
• D. X - ₹85,000, Y - ₹17,000

Answer 1

The correct option is A X - ₹75,000, Y - ₹25,000

Total capital of the firm on the basis of Z’s capital
= ₹ 25,000 × (5/1)
= ₹1,25,000
X’s Capital = ₹1,25,000 × 3/5* = ₹75,000
Y’s Capital = ₹1,25,000 × 1/5* = ₹25,000

*New ratio