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Question
A, B and C are partners in a firm sharing profits and losses in the ratio of 4 : 3 : 2. B decides to retire from the firm. Calculate new profit-sharing ratio of A and C in the following circumstances:
(a) If B gives his share to A and C in the original ratio of A and C.
(b) If B gives his share to A and C in equal proportion.
(c) If B gives his share to A and C in the ratio of 3 : 1.
(d) If B gives his share to A only.
Solution
Old Ratio (A, B and C) = 4 : 3 : 2
B retires from the firm.
His profit share = `3/9`
Case (a) B gives his share to A and C in their original ratio.
Original Share (A and C) = 4 : 2
Share taken by A = `3/9 xx 4/6 = 12/54`
Share taken by C = `3/9 xx 2/6 = 6/54`
New Ratio = Old Ratio + Share acquired from B
A's New share = `4/9 + 12/54 = 24+12/54 = 36/54`
C's New share = `2/9 + 6/54 = 12+6/54 = 18/54`
∴ New Profit Ratio (A and C) = 36 : 18 or 2 : 1
Case (b) B gives his share to A and C in equal proportion.
Share taken by A = `3/9 xx 1/2 = 3/18`
Share taken by C = `3/9 xx 1/2 = 3/18`
New Ratio = Old Ratio + Share acquired from B
A's New share = `4/9 + 3/18 = (8+3)/18 = 11/18`
C's New Share = `2/9 + 3/18 = (4+3)/18 = 7/18`
∴ New Profit Ratio (A and C) = 11 : 7
Case (c) B gives his to A and C in the ratio 3 : 1.
Share taken by A = `3/9 xx 3/4 = 9/36`
share taken by C = `3/9 xx 1/4 = 3/36`
New Ratio = Old Ratio + Share acquired from B
A's New share = `4/9 + 9/36 = (16+9)/36 = 25/36`
C's New share = `2/9 + 3/36 = (8+3)/36 = 11/36`
∴ New Profit Ratio (A and C) = 25 : 11
Case (d) B gives his share to A only.
A’s New Share = A’s Old Share + Share of B = `4/9 + 3/9 = 7/9`
C’s Share = `2/9`
∴ New Profit Ratio (A and C) = 7 : 2
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|
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|
Liabilities |
Amount (₹) |
Assets |
Amount (₹) |
|||
| Creditors |
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Cash | 1,20,000 | |||
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| G |
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10,50,000 |
Patents |
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||
| Building | 3,00,000 | |||||
|
|
|
Profit and Loss Account |
75,000 |
|||
|
13,05,000 |
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|||||
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Liabilities |
Amount (₹) |
Assets |
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||
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|
|
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|
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32,000 |
|
Patents | 10,000 | |
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1,21,000 |
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50,000 |
|
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|
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|
Liabilities |
Amount (₹) |
Assets |
Amount (₹) |
||
|
Sundry Creditors |
2,70,000 |
Cash in Hand |
42,500 |
||
|
General Reserve |
1,20,000 |
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2,14,500 |
||
|
Capital A/cs: |
Debtors | 1,63,000 | |||
| A |
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| C |
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4,00,000 |
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|
7,90,000 |
7,90,000 |
||||
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|
Liabilities |
₹ |
Assets |
₹ |
||
|
Creditors |
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Plant and Machinery |
40,000 |
||
|
General Reserve |
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||
|
Capital A/cs: |
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25,000 | ||
|
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1,20,000 |
||||
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Assets | Amount (₹) |
||
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|
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Assets |
Amount (₹) |
|
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Assets | Amount (₹) |
|
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as on 1st April, 2016
| Liabilities | ₹ | Assets | ₹ | |
| Capital A/cs: | Fixed Assets | 9,00,000 | ||
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| Sohan | 2,50,000 | |||
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| 14,20,000 | 14,20,000 | |||
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