Question 04 Chapter 4 of +2-A
4. A, B and C are partners sharing profits and losses in the ratio of 5 : 4 : 1.
Calculate new profit-sharing ratio, sacrificing ratio and gaining ratio in each of the following cases:
Case 1. C acquires 1/5th share from A.
Case 2. C acquires 1/5th share equally form A and B.
Case 3. A, B and C will share future profits and losses equally.
Case 4. C acquires 1/10th share of A and 1/2 share of B.
The solution of Question 04 Chapter 4 of +2-A:
Case I C acquires 1/5th from A
| Old Ratio of A,B, & C | = | 5 : 4 : 1 |
A sacrifice 1/5th share of Profit
C gain 1/5th share of Profit
Calculate the A, B, & C New Profit sharing ratio: –
Partner’s New Profit share = Old Ratio − or + Sacrifice/gain
| A’s New Share | = | 5 | – | 1 |
| 10 | 5 |
| = | 15 -2 | |
| 10 |
| = | 3 | ||
| 30 |
| B’s New Share | = | 4 | No change |
| 10 |
| C’s New Share | = | 1 | – | 1 |
| 10 | 5 |
| = | 6 – 2 | |
| 10 |
| = | 3 | ||
| 10 |
New Profit Ratio of A,B, & C = 3 : 4 : 3
Case II C acquires 1/5th share equally from A and B.
Old Ratio of A,B, & C = 5 : 4 : 1
A sacrifice 1/10th share of Profit
A sacrifice 1/10th share of Profit
C gain 1/5th share of Profit
Calculate the A, B, & C New Profit sharing ratio: –
Partner’s New Profit share = Old Ratio − or + Sacrifice/gain
| A’s New Share | = | 5 | – | 1 |
| 10 | 10 |
| = | 5 -1 | |
| 10 |
| = | 4 | |
| 10 |
| B’s New Share | = | 4 | – | 1 |
| 10 | 10 |
| = | 4 -1 | |
| 10 |
| = | 3 | |
| 10 |
| B’s New Share | = | 1 | + | 1 | + | 1 |
| 10 | 10 | 10 |
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| = | 1+1+1 | |
| 10 |
| = | 3 | |
| 10 |
New Profit Ratio of A,B, & C = 4 : 3 : 3
Case III A, B and C will share future profits and losses equally.
Old Ratio of A, B, & C = 5 : 4 : 1
New Ratio of A, B, & C = 1 : 1 : 1
Calculate the Sacrificing or Gaining Ratio of Partners
Sacrificing or Gaining Ratio= Old Ratio – New Ratio
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| A’s New Share | = | 5 | – | 1 |
| 10 | 3 |
| = | 15 -10 | |
| 30 |
| = | 5 | Sacrificing |
|
| 10 |
| B’s Share Sacrificing/Gaining | = | 4 | – | 1 |
| 10 | 3 |
| = | 12 -10 | |
| 30 |
| = | 2 | Sacrificing |
|
| 10 |
| B’s Share Sacrificing/Gaining | = | 1 | – | 1 |
| 10 | 3 |
| = | 3-10 | |
| 30 |
| = | – 7 | Gaining |
|
| 10 |
| Sacrificing Share of A | = | 5 |
| 30 |
| Sacrificing Share of B | = | 2 |
| 30 |
| Gaining Share of C | = | -7 |
| 30 |
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Case IV C acquires 1/10th share of A and 1/2 share of B.
Old Ratio of A,B, & C= 5 : 4 : 1
A sacrifice 1/10th of his share
A sacrifice 1/2th of his share
Calculate the A, B, & C New Profit sharing ratio: –
Partner’s Sacrifice fixed portion of him share = Old Ratio X Sacrificed portion
| A’s New Share | = | 5 | X | 1 |
| 10 | 3 |
| = | 1 | Sacrificing |
|
| 20 |
| B’s Sacrifice to C | = | 4 | X | 1 |
| 10 | 3 |
| = | 4 | Sacrificing |
|
| 20 |
| B’s Sacrifice to C | = | 4 | + | 1 |
| 20 | 20 |
| = | 1 + 4 | |
| 30 |
| = | 5 | Gaining |
|
| 20 |
Partner’s New Profit share = Old Ratio − or + Sacrifice/gain
| A’s New Share | = | 5 | – | 1 |
| 10 | 20 |
| = | 10 – 4 | |
| 20 |
| = | 9 | |
| 20 |
| B’s New Share | = | 4 | – | 4 |
| 10 | 20 |
| = | 8 – 4 | |
| 20 |
| = | 4 | |
| 20 |
| C’s New Share | = | 1 | + | 1 | + | 4 |
| 10 | 20 | 20 |
| = | 2 + 1 + 4 | |
| 20 |
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| = | 7 | |
| 20 |
New Profit Ratio of A, B, & C = 9 : 4 : 7
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
Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication
