Question

A and B are partners in a firm sharing profits and losses in the ratio of 3 : 2. C is admitted into partnership. A sacrifices `1/3` of his share and B `1/10` from his share in favour of C. C brings ₹ 1,20,000 as his share of goodwill in Cash. Goodwill credited to A and B will be ______.

Options

• A ₹ 40,000; B ₹ 80,000

• A ₹ 1,08,000; B ₹ 12,000

• A ₹ 72,000; B ₹ 48,000

• A ₹ 80,000; B ₹ 40,000

Answer 1

A and B are partners in a firm sharing profits and losses in the ratio of 3 : 2. C is admitted into partnership. A sacrifices `1/3` of his share and B `1/10` from his share in favour of C. C brings ₹ 1,20,000 as his share of goodwill in Cash. Goodwill credited to A and B will be A ₹ 80,000 and B ₹ 48,000.

Explanation:

Sacrifice by A = `3/5 xx 1/3`

= `3/15`

= `1/5`

To simplify, use a common denominator of 10:

= `(1 xx 2)/(5 xx 2)`

= `2/10`

Sacrifice by B = `1/10`

Sacrifice Ratio of A and B = `2/10 : 1/10` or 2 : 1

A’s Share of Goodwill = `1,20,000 xx 2/3`

= 80,000

B’s Share of Goodwill = `1,20,000 xx 1/3`

= 40,000