Question

A and B are in partnership, sharing profits in the ratio of 3 : 2. They take C as a new partner. Goodwill of the firm is valued at ₹ 3,00,000, and C brings ₹ 30,000 as his share of goodwill in cash, which is entirely credited to the Capital Account of A. New profit sharing ratio will be ______.

Options

• 3 : 2 : 1

• 6 : 3 : 1

• 5 : 4 : 1

• 4 : 5 : 1

Answer 1

A and B are in partnership, sharing profits in the ratio of 3 : 2. They take C as a new partner. Goodwill of the firm is valued at ₹ 3,00,000, and C brings ₹ 30,000 as his share of goodwill in cash, which is entirely credited to the Capital Account of A. New profit sharing ratio will be 5 : 4 : 1.

Explanation:

C’s share of goodwill = 30,000

Total firm’s goodwill = 3,00,000

C’s share in future profit = `(30,000)/(3,00,000)`

= `1/10`

A’s sacrifice = C’s share of profit = `1/10`

A’s New Share = Old Share − Sacrifice Share

= `3/5 - 1/10`

= `(3 xx 2)/(5 xx 2) - 1/10`

= `6/10 - 1/10`

= `5/10`

B’s New Share = `2/5`

= `(2 xx 2)/(5 xx 2)`

= `4/10`

C’s New Share = `1/10`

The new ratio of  A, B, and C = `5/10 : 4/10 : 1/10` or 5 : 4 : 1.