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Question
From the following particulars, calculate new profit-sharing ratio of the partners:
(a) Shiv, Mohan and Hari were partners in a firm sharing profits in the ratio of 5 : 5 : 4. Mohan retired and his share was divided equally between Shiv and Hari.
(b) P, Q and R were partners sharing profits in the ratio of 5 : 4 : 1. P retires from the firm.
Solution
(a)
Old Ratio (Shiv, Mohan and Hari) = 5 : 5 : 4
Mohan’s Profit Share = `5/14`
His share is divided between Shiv and Hari equally i.e. in the ratio of `1 : 1`
`"Share of mohan taken by shiv" = 5/14 xx 1/2 = 5/28`
`"Share of Mohan taken by Hari" = 5/14 xx 1/2 = 5/28`
New Profit Share = Old Profit Share + Share taken from Mohan
`"Shiv's New Share" = 5/14 + 5/28 = 10+5/28 = 15/28`
`"Hari's New Share "= 4/14 + 5/28 = 8+5/28 = 13/28`
∴ New Profit Ratio (Shiv and Hari) = 15 : 13
(b)
Old Ratio (P, Q and R) = `5 : 4 : 1`
P’s Profit Share = `5/10`
As we can see, no information is given as to how Q and R are acquiring P's profit share after his retirement, so the new profit sharing ratio between Q and R is calculated just by crossing out the P’s share. That is, the new ratio becomes `4 : 1`
∴New Profit Ratio (Q and R) = `4 : 1`
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Assets | Amount (₹) |
|
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|
Liabilities |
Amount (₹) |
Assets |
Amount (₹) |
||
| Creditors |
21,000 |
Cash at Bank | 5,750 | ||
| Workmen Compensation Reserve |
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Debtors |
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|
|
| Investments Fluctuation Reserve |
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|
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|
Patents | 10,000 | |
| Z |
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|
| Goodwill | 6,000 | ||||
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|
1,60,000 |
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||||
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|
Liabilities |
Amount (₹) |
Assets |
Amount (₹) |
||
| Creditors |
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|
30,000 |
|
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|
| Less: Provision |
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|||
|
|
|
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|
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|
Liabilities |
Amount (₹) |
Assets |
Amount (₹) |
||
|
Sundry Creditors |
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||
|
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||
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|
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||||
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|
Liabilities |
Amount (₹) |
Assets |
Amount (₹) |
||
|
Bills Payable |
2,000 |
Cash at Bank |
5,800 |
||
|
Employees' Provident Fund |
5,000 |
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800 |
||
|
Workmen Compensation Reserve |
6,000 |
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|
Capital A/cs: |
Plant and Machinery | 6,500 | |||
| X | 22,750 | Building | 30,000 | ||
| Y |
15,250 |
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| Z |
12,000 |
50,000 |
|||
|
76,100 |
76,100 |
||||
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| Liabilities | Amount (₹) |
Assets | Amount (₹) |
||
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