Partners D, E and F run a firm with profit‑sharing ratio 3:2:1. Capital balances are Rs. 1,80,000; Rs. 1,20,000; Rs. 1,50,000 respectively. At dissolution, the firm’s assets are Cash Rs. 2,00,000; Debtors Rs. 1,80,000; Stock Rs. 1,20,000; Machinery (book value) Rs. 2,40,000. Liabilities are Creditors Rs. 1,20,000; Bank loan Rs. 1,00,000. The machinery has a revaluation surplus of Rs. 60,000. Goodwill is Rs. 2,00,000 and will be adjusted in the outgoing partner’s capital account. Partner F is an outgoing partner and has died, entitled to a bonus of 15% on his capital. What cash amount will each partner receive on dissolution after all adjustments?

Step-by-step solution

1. Calculate total assets: $2,00,000+1,80,000+1,20,000+2,40,000=7,40,000$.
2. Add revaluation surplus: $7,40,000+60,000=8,00,000$.
3. Calculate total liabilities: $1,20,000+1,00,000=2,20,000$.
4. Net assets: $8,00,000-2,20,000=5,80,000$.
5. Bonus for F: $1,50,000\times 15$.
6. Increase F’s capital to $1,72,500$ (not affecting distribution).
7. Adjust goodwill in F’s capital: $2,00,000$ is credited to F’s account.
8. Now distribute net assets in ratio 3:2:1: Ratio sum = 6.
9. Cash per ratio unit = $5,80,000÷6=96,666.67$.
10. Partner D receives $3\times 96,666.67=2,90,000$ (rounded to 2,90,001).
11. Partner E receives $2\times 96,666.67=1,93,334$.
12. Partner F receives $1\times 96,666.67=96,667$.

Concept tested: Cash distribution after goodwill and bonus

Published 4 October 2026 · How this solution was prepared and checked