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Atul and Neera Were Partners in a Firm Sharing Profits in the Ratio of 3: 2. They Admitted Mitali as a New Partner. - Accountancy


Atul and Neera were partners in firm sharing profits in the ratio of 3: 2. They admitted Mitali as a new partner. Goodwill of the firm was valued at ₹ 2,00,000. Mitali brings her share of a goodwill premium of ₹ 20,000 in cash, which is entirely credited to Atul's Capital Account. Calculate the new profit sharing ratio.

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Revalued Goodwill of the firm on Mitali’s admission = ₹ 2,00,000
Premium for Goodwill brought in cash by Mitali = ₹ 20,000

So, Mitali’s share in future profit of the firm = `(20,000)/(2,00,000) = (1)/(10)`

Atul’s Account has only been credited by the premium brought in by Mitali

So, Atul’s Sacrificing Share = Profit Share of Mitali  = `(1)/(10)`

New Profit Share of Atul = Old Profit Share – Sacrificing Share

New Profit Share of Atul = `(3)/(5) - (1)/(10) = (5)/(10)`


  Atul   Neera   Mitali
New Profit Sharing Ratio `(5)/(10)`   `(2)/(5)`   `(1)/(10)`
OR `(5)/(10)`   `(4)/(10)`   `(1)/(10)`
OR 5 : 4 : 1
Concept: Retirement and Death of a Partner - Calculation of New Profit Sharing Ratio
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