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Question
A, B, C and D are in partnership sharing profits and losses in the ratio of 36 : 24 : 20 : 20 respectively. E joins the partnership for 20% share and A, B, C and D in future would share profits among themselves as 3/10 : 4/10 : 2/10 : 1/10. Calculate new profit-sharing ratio after E's admission.
Solution
Old ratio = A : B : C : D
= 36 : 24 : 20 : 20
E is admitted for `20/100` share
Let combined share of profit of all partners after E’s admission = 1
Combined share of A, B, C and D after E’s admission = 1 − E’s Share
= `1 - 20/100 = 80/100`
New Ratio = Combined of A, B, C and D. Agreed Share of A, B, C and D
A's = `80/100 xx 3/10 = 24/100`
B's = `80/100 xx 4/10 = 32/100`
C's = `80/100 xx 2/10 = 16/100`
D's = `80/100 xx 1/10 = 8/100`
New Profit Sharing Ratio = A : B : C : D : E
= `24/100 : 32/100 : 16/100 : 8/100 : 20/100`
= ` 6 : 8 : 4 : 2 : 5`
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Balance Sheet of A and B as on March 31, 2016 |
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Liabilites |
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Sundry creditors |
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