Question

Kajal and Laura were partners in a firm sharing profits and losses in the ratio of 5 : 3. They admitted Maddy for \( \frac{1}{4} \)th share in future profits. Maddy brought Rs 8,00,000 as his capital and Rs 4,00,000 as his share of premium for goodwill. Kajal, Laura and Maddy decided to share profits in future in the ratio of 2 : 1 : 1. After all adjustments in respect of goodwill, revaluation of assets and liabilities etc. Kajal's capital was Rs 15,00,000 and Laura's capital was Rs 8,00,000. It was agreed that partners' capitals should be in proportion to their new profit sharing ratio taking Maddy's capital as base. The adjustment was made by bringing in or withdrawing the necessary cash as the case may be. The cash brought in by Kajal was :

• A. Rs 1,00,000
• B. Rs 8,00,000
• C. Rs 16,00,000
• D. Rs 12,00,000

Hint:

For capital adjustments based on a new partner's capital:
1. Find the firm's Total Capital = New Partner's Capital / New Partner's Share.
2. Calculate each partner's Required Capital = Partner's New Share x Total Capital.
3. Find the difference: Required Capital vs. Existing Adjusted Capital. If Required $>$ Existing, bring cash; If Existing $>$ Required, withdraw cash.

Answer 1

The Correct Option is A

Step 1: Calculate the Total Capital of the New Firm:
New Ratio (Kajal : Laura : Maddy) = 2 : 1 : 1. Maddy's share is \( \frac{1}{4} \).
Maddy's Capital = Rs 8,00,000 for \( \frac{1}{4} \) share.
Total Capital of the firm (based on Maddy's capital) = Maddy's Capital / Maddy's Share
Total Capital = Rs 8,00,000 / \( \frac{1}{4} \) = Rs 8,00,000 \( \times \) 4 = Rs 32,00,000.
Step 2: Calculate Kajal's Required Capital in the New Firm:
Kajal's share in the new ratio = \( \frac{2}{4} \) (from 2:1:1).
Kajal's Required Capital = Kajal's New Share \( \times \) Total Capital
Kajal's Required Capital = \( \frac{2}{4} \times 32,00,000 = Rs 16,00,000 \).
Step 3: Determine the Cash Adjustment for Kajal:
Kajal's Existing Capital (after all adjustments) = Rs 15,00,000.
Kajal's Required Capital = Rs 16,00,000.
Since Required Capital $>$ Existing Capital, Kajal needs to bring in cash.
Cash to be brought in by Kajal = Required Capital - Existing Capital
Cash to be brought in by Kajal = Rs 16,00,000 - Rs 15,00,000 = Rs 1,00,000.
Conclusion:
The cash brought in by Kajal was Rs 1,00,000.