Question 11 Chapter 6 of +2-Part-1
11.(NPS/Gaining Ratio) X , Y and Z are sharing profit in the ratio of 9 : 7 : 4. Y retires. Amount due to Y on retirement on account of goodwill, was calculated to be Rs. 42,000.
Calculate new and gaining ratio if
Calculation of Gaining ratio
| (a) Old profit sharing ratio of X , Y & Z | = | 9 | : | 7 | : | 4 |
| 20 | 20 | 20 |
Goodwill payable to Y = Rs 42,000
Amount contributes by X & Z to Y on his retirement is Rs. 24,000 & Rs. 18,000
respectively , i.e. , in the ratio 4 : 3
Thus Y’s share has been bought by X & Y in the ratio 4 : 3 ‘ i.e. , gaining ratio
X’s New share = Old share + Gain
| X’s New share = Old share + (Y’s Share X Gaining Share of X) |
= | 9 | + | 7 | X | 4 |
| 20 | 20 | 7 | ||||
| = | 9 | + | 4 | |||
| 20 | 20 | |||||
| = | 13 | |||||
| 20 |
| Z’s New share = Old share + (Y’s Share x Z's Gain) |
= | 4 | + | 7 | X | 3 |
| 20 | 20 | 7 | ||||
| = | 4 | + | 3 | |||
| 20 | 20 | |||||
| = | 7 | |||||
| 20 |
New Profit Sharing ratio = 13 : 7
| (b) Old profit sharing ratio of X, Y & Z | = | 9 | : | 7 | : | 4 |
| 20 | 20 | 20 |
Amount contributes by X & Z to Y on his retirement is ₹ 12,000 and ₹ 30,000 respectively
Gaining Ratio of X and Z = ₹ 12,000 : ₹ 30,000
Gaining Ratio = 2 : 5
Goodwill payable to Y = Rs 42,000
Thus Y’s share has been bought by X & Y in the ratio 2: 5 ‘ i.e., gaining ratio
| X’s New share = Old share + (Y’s Share X Gaining Share of X) |
= | 9 | + | 7 | X | 2 |
| 20 | 20 | 7 | ||||
| = | 9 | + | 2 | |||
| 20 | 20 | |||||
| = | 11 | |||||
| 20 |
| Z’s New share = Old share + (Y’s Share x Gaining Share of Z) |
= | 4 | + | 7 | X | 5 |
| 20 | 20 | 7 | ||||
| = | 4 | + | 5 | |||
| 20 | 20 | |||||
| = | 9 | |||||
| 20 |
New Profit Sharing ratio of X and Z = 11 : 9
Comment if you have any questions.
Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
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