Question 03 Chapter 5 of +2-A - T.S. Grewal 12 Class Part

Question 03 Chapter 5 of +2-A

Table of Contents

The solution of Question 03 Chapter 5 of +2-A

T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

3. A and B are partners sharing profits and losses in the proportion of 7 : 5. They agree to admit C, their manager, into partnership who is to get 1/6th share in the profits. He acquires this share as 1/24th from A and 1/8th from B. Calculate new profit-sharing ratio.

The solution of Question 03 Chapter 5 of +2-A

Old Ratio of A and B	=	7 : 5
C is admitted for 1/6th share of profit

A Sacrifice his share in the favour of C = 1/24
B Sacrifice his share in the favour of C = 1/8
In this case, we don’t need to calculate the remaining share because the sacrificed share of old partners is already given in the question. So we can calculate the new Profit Sharing ratio with the following formula
New Ratio of Old Partners = Old Ratio – Sacrificed Ratio

A New Profit Share	=	7	–	1
		12		24

	=	14 – 1
	=	24

	=	13
		24

B New Profit Share	=	5	–	1
		12		8

	=	10 – 3
	=	24

	=	7
	=	24

C’s Share	=	1	X	4
		6		4

	=	4
	=	24

New Profit sharing Ratio between All partners

12: 7: 4

T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)

Chapter No. 1 – Financial Statement of Not-For-Profit Organisations
Chapter No. 2 – Accounting for Partnership Firms – Fundamentals
Chapter No. 3 – Goodwill: Nature and Valuation
Chapter No. 4 – Change in Profit-Sharing Ratio Among the Existing Partners
Chapter No. 5 – Admission of a Partner
Chapter No. 6 – Retirement/Death of a Partner
Chapter No. 7 – Dissolution of a Partnership Firm

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

Chapter No. 8 – Company Accounts – Accounting for Share Capital
Chapter No. 9 – Company Accounts – Issue of Debentures
Chapter No. 10 – Redemption of Debentures

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

Chapter No. 1 – Financial Statements of a Company
Chapter No. 2 – Financial Statement Analysis
Chapter No. 3 – Tools of Financial Statement Analysis – Comparative Statements and Common- Size Statements
Chapter No. 4 – Accounting Ratios
Chapter No. 5 – Cash Flow Statement

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