Question 09 Chapter 5 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 09 Chapter 5 of +2-A

Question 09 Chapter 5 of +2-A

Find New Profit-sharing Ratio:

  1. 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.
  2. A and B are partners. They admit C for 1/4th share. In future, the ratio between A and B would be 2: 1.
  3. 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.
  4. 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.
  5. A and B are equal partners. They admit C and D as partners with 1/5th and 1/6th share respectively.
  6. 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 = 6 : 3 : 3
  = 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)

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

2 Book 1 min - Question 09 Chapter 5 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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