A& B are partners sharing profits and losses in the ratio of 3:2. C is admitted for ¼ and for which₹30,000 and ₹10,000 are credited as a premium for goodwill to A and B respectively. The new profit-sharing ratio of A:B:C will be:a) 3:2:1b) 12:8:5c) 9:6:5d) 33:27:20
Question
A& B are partners sharing profits and losses in the ratio of 3:2. C is admitted for ¼ and for which₹30,000 and ₹10,000 are credited as a premium for goodwill to A and B respectively. The new profit-sharing ratio of A:B:C will be:a) 3:2:1b) 12:8:5c) 9:6:5d) 33:27:20
Solution
To find the new profit-sharing ratio of A:B:C, we need to calculate the new capital contributions of each partner.
Initially, A and B were sharing profits and losses in the ratio of 3:2. This means that A's share was 3/5 and B's share was 2/5.
C is admitted for 1/4, which means C's share will be 1/4.
To calculate the new capital contributions, we need to consider the premium for goodwill credited to A and B. A received ₹30,000 and B received ₹10,000.
Adding the premium to their capital contributions, we have:
A's new capital = A's old capital + premium = 3/5 + ₹30,000 B's new capital = B's old capital + premium = 2/5 + ₹10,000
Now, we can calculate the new profit-sharing ratio:
A:B:C = A's new capital : B's new capital : C's share = (3/5 + ₹30,000) : (2/5 + ₹10,000) : 1/4
Simplifying the ratios, we get:
A:B:C = (3/5 + ₹30,000) : (2/5 + ₹10,000) : 1/4 = (3/5 + 6/10) : (2/5 + 2/10) : 1/4 = (9/10) : (4/5) : 1/4 = 9:8:5
Therefore, the new profit-sharing ratio of A:B:C will be 9:8:5.
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