Question 04 Chapter 4 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 04 Chapter 4 of +2-A

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 form 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
  = 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

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

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
  = 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
  = 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)

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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2 Book 1 min - Question 04 Chapter 4 of +2-A - T.S. Grewal 12 Class Part - A Vol. 1
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

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