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A new partner brings ₹1,80,000 in cash as premium for goodwill. The old partners withdraw ₹1,20,000 from this amount. What will be the net increase in the firm's bank balance?

Answer and explanation

Correct answer: ₹60,000

The bank receives ₹1,80,000 from the incoming partner and pays out ₹1,20,000 to the old partners. Therefore, the net increase in the bank balance is ₹1,80,000 − ₹1,20,000 = ₹60,000. ₹1,20,000 represents only the withdrawal, not the net increase. Exam tip: For the bank effect, subtract total payments from total receipts.

Related tags

GoodwillPremium For GoodwillPartnership AdmissionBank BalanceWithdrawalPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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