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A new partner brings ₹40,000 as capital for a 1/5 share in the firm. If capital is contributed in proportion to the profit-sharing share, what is the estimated total capital of the firm?

Answer and explanation

Correct answer: ₹2,00,000

₹40,000 represents 1/5 of the estimated total capital. Therefore, total capital = ₹40,000 ÷ 1/5 = ₹2,00,000. Option D incorrectly multiplies ₹40,000 by 4, giving only the amount corresponding to the remaining 4/5, not the total capital. Exam tip: to find the whole from a fractional share, divide the given amount by that fraction.

Related tags

Hidden GoodwillEstimated CapitalProportionate CapitalEasy NumericalGoodwill AccountingReconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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