Question 03 Chapter 5 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 03 Chapter 5 of +2-A

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 sacrificed share of old partners is already given in the question. So we can calculate the new Profit Sharing ratio with 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. 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