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A new partner brings ₹1,00,000 in cash as goodwill premium. The old partners withdraw half of this amount. What will be the net increase in the firm’s bank balance after these transactions?

Answer and explanation

Correct answer: ₹50,000

The firm receives ₹1,00,000 in the bank from the new partner. The old partners withdraw half of it, i.e. ₹50,000. Therefore, the net increase in the bank balance is ₹1,00,000 − ₹50,000 = ₹50,000. Exam tip: record both the receipt of the goodwill premium and its withdrawal when finding the net bank effect.

Related tags

GoodwillPremiumPartnership AccountsBank TransactionsAdmission Of PartnerPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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