Question

A and B are partners sharing profits in the ratio of 4 : 3. C is admitted for `1/5`th share, and he brings in ₹ 2,10,000 as his share of goodwill in cash, of which ₹ 1,80,000 is credited to A and the remaining amount to B. The new profit-sharing ratio will be ______.

Options

• 2 : 1 : 2

• 1 : 2 : 2

• 2 : 2 : 1

• 4 : 3 : 5

Answer 1

A and B are partners sharing profits in the ratio of 4 : 3. C is admitted for 1/5th share, and he brings in ₹ 2,10,000 as his share of goodwill in cash, of which ₹ 1,80,000 is credited to A and the remaining amount to B. The new profit-sharing ratio will be 2 : 2 : 1.

Explanation:

Goodwill Credited to A = ₹ 1,80,000

Goodwill Credited to B = ₹ 30,000

Sacrifice Ratio of A and B = 1,80,000 : 30,000 = 6 : 1

C’s share = `1/5`

A’s Sacrifice = `1/5 xx 6/7`

= `6/35`

B’s Sacrifice = `1/5 xx 1/7`

= `1/35`

A’s new ratio = `4/7 - 6/35`

= `(4 xx 5)/(7 xx 5) - 6/35`

= `20/35 - 6/35`

= `14/35`

= `2/5`

B’s new ratio = `3/7 - 1/35`

= `(3 xx 5)/(7 xx 5) - 1/35`

= `15/35 - 1/35`

= `14/35`

= `2/5`

C’s ratio = `1/5`

= `(1 xx 7)/(5 xx 7)`

= `7/35`

= `1/5`

New Ratios of A, B and C = `2/5 : 2/5 : 1/5` or 2 : 2 : 1