Question 12 Chapter 6 of +2-A
12. A, B and C are partners in a firm sharing profits and losses in the ratio of 4 : 3 : 2. B decides to retire from the firm. Calculate new profit-sharing ratio of A and C in the following circumstances:
a If B gives his share to A and C in the original ratio of A and C.
b If B gives his share to A and C in equal proportion.
c If B gives his share to A and C in the ratio of 3 : 1.
d If B gives his share to A only.
The solution of Question 12 Chapter 6 of +2-A: –
Old Ratio A, B and C = 4 : 3 : 2
B retires from the firm.
| His profit share | = | 3 |
| 9 |
Case a B gives his share to A and C in their original ratio.
Original Share A and C = 4 : 2
| Share taken by A | = | 3 | X | 4 |
| 9 | 6 |
| = | 12 | |
| 54 |
| Share taken by C | = | 3 | X | 2 |
| 9 | 6 |
| = | 6 | |
| 54 |
New Ratio = Old Ratio + Share acquired from B
| A’s New Share | = | 4 | + | 12 |
| 9 | 54 |
| = | 24 + 12 | |
| 54 |
| = | 36 | |
| 54 |
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| C’s New Share | = | 2 | + | 6 |
| 9 | 54 |
| = | 12 + 6 | |
| 54 |
| = | 18 | |
| 54 |
∴ New Profit Ratio A and C = 36 : 18 or 2 : 1
Case b B gives his share to A and C in equal proportion
| Share taken by A | = | 3 | X | 1 |
| 9 | 2 |
| = | 3 | |
| 18 |
| Share taken by C | = | 3 | X | 1 |
| 9 | 2 |
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| = | 3 | |
| 18 |
New Ratio = Old Ratio + Share acquired from B
| A’s New Share | = | 4 | + | 3 |
| 9 | 18 |
| = | 8 + 3 | |
| 18 |
| = | 11 | |
| 18 |
| C’s New Share | = | 2 | + | 3 |
| 9 | 18 |
| = | 4 + 3 | |
| 18 |
| = | 7 | |
| 18 |
∴ New Profit Ratio A and C = 11 : 7
Case c B gives his to A and C in the ratio 3 : 1.
| Share taken by A | = | 3 | X | 3 |
| 9 | 4 |
| = | 9 | |
| 36 |
| Share taken by C | = | 3 | X | 1 |
| 9 | 4 |
| = | 3 | |
| 36 |
New Ratio = Old Ratio + Share acquired from B
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| A’s New Share | = | 4 | + | 9 |
| 9 | 36 |
| = | 16 + 9 | |
| 36 |
| = | 25 | |
| 36 |
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| C’s New Share | = | 2 | + | 3 |
| 9 | 36 |
| = | 8 + 3 | |
| 36 |
| = | 11 | |
| 36 |
∴ New Profit Ratio A and C = 25 : 11
Case d B gives his share to A only
| A’s New Share = A’s Old Share + Share of B | = | 4 | + | 3 |
| 9 | 9 |
| = | 7 | |
| 9 |
| C’s Share | = | 2 |
| 9 |
∴ New Profit Ratio A and C = 7 : 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
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