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

• 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