Question

Manas and Ranvir are partners in a firm having capital balances of ₹1,20,000 and ₹80,000 respectively. Sanju is admitted as a new partner in the firm for a 1/5 share in future profits. Sanju brought ₹1,00,000 as his capital. The goodwill of the firm on Sanju’s admission will be:

• A. ₹5,00,000
• B. ₹2,00,000
• C. ₹3,00,000
• D. ₹1,00,000

Hint:

Goodwill is calculated as the difference between the total capital inferred from the new partner’s contribution and the existing combined capital of the old partners.

Answer 1

The Correct Option is B

To calculate the goodwill of the firm on Sanju’s admission, follow these steps: Step 1: Calculate the total capital of the firm based on Sanju’s share. Sanju's share in the profits is $\frac{1}{5}$. This means the total capital of the firm can be calculated as: \[ \text{Total Capital of the Firm} = \frac{\text{Sanju’s Capital}}{\text{Sanju’s Share}} = \frac{₹1,00,000}{\frac{1}{5}} = ₹5,00,000. \] Step 2: Calculate the combined capital of existing partners. The combined capital of Manas and Ranvir is: \[ \text{Combined Capital} = ₹1,20,000 + ₹80,000 = ₹2,00,000. \] Step 3: Calculate the goodwill of the firm.} Goodwill of the firm is the difference between the total capital of the firm and the combined capital of the existing partners: \[ \text{Goodwill} = \text{Total Capital of the Firm} - \text{Combined Capital of Existing Partners}. \] \[ \text{Goodwill} = ₹5,00,000 - ₹2,00,000 = ₹3,00,000. \] Final Answer: The goodwill of the firm on Sanju’s admission is \( \boxed{₹2,00,000} \).