question_answer

A, B and C are partners in a firm sharing profits in the ratio of 3 : 2 : 1. On 1st April, 2017, A retries from the firm, B and C agree that the capital of the new firm shall be fixed at Rs. 4,20,000 in the profit sharing ratio. The capital accounts of B and C after all adjustments on the date of retirement showed balances of Rs. 2,90,000 and 1,26,000 respectively. State the amount of actual cash to be brought in or to be paid to the partners.

Answer:

                                    Calculation of Cash to be Brought in or Paid Out

	Particulars	B (Rs.)	C (Rs.)
I.	New Capital (Rs. 4,20,000 in the ratio of 2 : 1)	2,80,000	1,40,000
II.	Capital after all Adjustments	2,90,000	1,26,000
III.	Cash to be Brought in (Paid off) (I-II)	(10,000)	14,000

It means B will take Rs. 10,000 and C will bring Rs. 14,000 to make their capital in new ratio.