Question 09 Chapter 5 of +2-A
Find New Profit-sharing Ratio:
- R and T are partners in a firm sharing profits in the ratio of 3: 2. S joins the firm. R surrenders 1/4th of his share and T 1/5th of his share in favour of S.
- A and B are partners. They admit C for 1/4th share. In future, the ratio between A and B would be 2: 1.
- A and B are partners sharing profits and losses in the ratio of 3: 2. They admit C for 1/5th share in the profit. C acquires 1/5th of his share from A and 4/5th share from B.
- X, Y and Z are partners in the ratio of 3: 2: 1. W joins the firm as a new partner for 1/6th share in profits. Z would retain his original share.
- A and B are equal partners. They admit C and D as partners with 1/5th and 1/6th share respectively.
- A and B are partners sharing profits/losses in the ratio of 3: 2. C is admitted for 1/4th share. A and B decide to share equally in future.
The solution of Question 09 Chapter 5 of +2-A
Case I
| Old Ratio of R and T | = | 3: 2 |
| R Sacrifice his share in the favour of S | = | 1/4th |
| T Sacrifice his share in the favour of S | = | 1/5th |
In this case, we have to calculate the sacrificing share of both partners with the following formula and then subtract this share from the profit share of old partners: –
Sacrificing Share of Old Partners = New Partner’s Share X Sacrificed Ratio
| R Sacrificing Share | = | 3 | X | 1 |
| 5 | 4 |
| = | 3 | |
|
| 20 |
| T Sacrificing Share | = | 2 | – | 1 |
| 5 | 5 |
| = | 2 | |
| 25 |
New Ratio of Old Partners = Old Ratio – Sacrificed Ratio
| R New Profit Share | = | 3 | + | 3 |
| 5 | 20 |
| = | 12 – 3 | |
| 20 |
| = | 9 | |
| 20 |
| T New Profit Share | = | 2 | + | 2 |
| 5 | 25 |
| = | 10 – 2 | |
| 25 |
| = | 8 | |
| 25 |
S’s Share = R’s Sacrificing + T’s Sacrificing
| T New Profit Share | = | 3 | + | 2 |
| 20 | 25 |
| = | 15 + 8 | |
| 100 |
| = | 23 | |
| 100 |
| New Profit sharing Ratio between All partners | = | 9 | : | 8 | : | 23 |
| 20 | 25 | 100 |
| = | 45: 32: 23 | |
| 100 | ||
| = | 45: 32: 23 |
Case II
| Old Ratio of A and B | = | 2: 1 |
| C is admitted for 1/4th share of profit |
Let the total share of the business = 1
The remaining share of A and B after C’s Admission = Total Share – C’s Share
| T New Profit Share | = | 1 | – | 1 |
| 4 |
| = | 4 – 1 | |
| 4 |
| = | 3 | |
| 4 |
To Calculate to New Ratio distribute the remaining share in the old ratio of old partners’
New Ratio = Combined share of A and B X Old Ratio
| A’s New Ratio | = | 3 | + | 2 |
| 4 | 3 |
| = | 6 | |
| 12 |
| B’s New Ratio | = | 3 | + | 1 |
| 4 | 3 |
| = | 3 | |
| 12 |
| C’s New Ratio | = | 1 | + | 3 |
| 4 | 3 |
| = | 3 | |
| 12 |
| New Profit sharing Ratio between A, B and C | = | |
| = | 2: 1: 1 |
Case III
| Old Ratio of A and B | = | 3: 2 |
| C admits for 1/5th share of profit | ||
| C acquires 1/5th of his share from A | ||
| C acquires 4/5th of his share from B |
Sacrificing Share of Old Partners = C’s Share x Sacrificed Ratio
| A’s Sacrifice Share | = | 1 | x | 1 |
| 5 | 5 |
| = | 1 | |
| 25 |
| B’s Sacrifice Share | = | 1 | X | 4 |
| 5 | 25 |
| = | 4 | |
| 25 |
New Ratio of Old Partners = Old Ratio – Sacrificed Ratio
| A’s Sacrifice Share | = | 3 | – | 1 |
| 5 | 25 |
| = | 15 – 1 | |
| 100 |
| = | 14 | |
| 25 |
| B New Profit Share | = | 2 | – | 4 |
| 5 | 25 |
| = | 10 – 4 | |
| 25 |
| = | 6 | |
| 25 |
| C’s Share | = | 1 | x | 5 |
| 5 | 5 |
| = | 5 | |
| 25 |
| New Profit sharing Ratio between All partners |
= | 14: 6: 5 |
Case IV
| Old Ratio of X, Y and Z | = | 3: 2: 1 |
| W is admitted for 1/6th share of profit |
Z would retain his original share. So we have to subtract z share also from total
Let the total share of the business = 1
The remaining share of X and Y = Total Share – W’s Share – Z’s Share
| Remaining share | = | 1 | – | 1 | – | 1 |
| 6 | 6 |
| = | 6 – 1 – 1 | |
| 6 |
| = | 4 | |
| 6 |
To Calculate to New Ratio distribute the remaining share in the old ratio of old partners’
New Ratio = Remaining share for X and Z X Old Ratio
| X’s New Ratio | = | 4 | x | 3 |
| 6 | 5 |
| = | 12 | |
| 30 |
| Y’s New Ratio | = | 4 | x | 2 |
| 6 | 5 |
| = | 12 | |
| 30 |
| Z’s New Ratio | = | 1 | x | 5 |
| 6 | 5 |
| = | 5 | |
| 30 |
| W’s New Ratio | = | 1 | x | 5 |
| 6 | 5 |
| = | 5 | |
| 30 |
| New Profit sharing Ratio between All partners |
= | 12: 8: 5: 5 |
Case V
| Old Ratio of A and B | = | 1: 1 |
| C is admitted for 1/5th share of profit | ||
| D is admitted for 1/6th share of profit |
Let the total share of the business = 1
The remaining share of A and B = Total Share – C’s Share – D’s Share
| Remaining share | = | 1 | – | 1 | – | 1 |
| 5 | 6 |
| = | 30 – 6 -5 | |
| 30 |
| = | 19 | |
| 30 |
To Calculate to New Ratio distribute the remaining share in the old ratio of old partners’
New Ratio = Remaining share for A and B X Old Ratio
| A’s New Ratio | = | 19 | x | 1 |
| 30 | 2 |
| = | 19 | |
| 60 |
| B’s New Ratio | = | 19 | x | 1 |
| 30 | 2 |
| = | 19 | |
| 60 |
| C’s New Ratio | = | 1 | x | 12 |
| 5 | 12 |
| = | 12 | |
| 60 |
| D’s New Ratio | = | 1 | x | 10 |
| 6 | 10 |
| = | 10 | |
| 60 |
| New Profit sharing Ratio between All partners |
= | 19: 19: 12: 10 |
Case VI
| Old Ratio of A and B | = | 3: 2 |
| C is admitted for 1/4th share of profit |
Let the total share of the business = 1
The remaining share of A and B after C’s Admission = Total Share – C’s Share
| Remaining share | = | 1 | – | 1 |
| 4 |
| = | 4 – 1 | |
| 4 |
| = | 3 | |
| 4 |
To Calculate to New Ratio distribute the remaining share in the Equal ratio of old partners’ because they decide to share future profit equal.
New Ratio = Combined share of A and B X Old Ratio
| A’s New Ratio | = | 3 | x | 1 |
| 4 | 2 |
| = | 3 | |
| 8 |
| B’s New Ratio | = | 3 | x | 1 |
| 4 | 2 |
| = | 3 | |
| 8 |
| C’s New Ratio | = | 1 | x | 2 |
| 4 | 2 |
| = | 2 | |
| 8 |
| New Profit sharing Ratio between All partners |
= | 3: 3: 2 |
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
