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On 1.1.2008, Uday and Kaushal Entered into a Partnership with Fixed Capitals of Rs 7,00,000 and Rs 3,00,000 Respectively. the Sacrificing Ratio of Uday and Kaushal on Govind'S Admission. New Profit Sharing Ratio of Uday. Kaushal, Govind and Had on Hari'S Admission. New Profit Sharing Ratio of Uday, Kaushal and Hari on Govind'S Death. - Accountancy

On 1.1.2008, Uday and Kaushal entered into a partnership with fixed capitals of Rs 7,00,000 and Rs 3,00,000 respectively. They were doing good business and were interested in its expansion but could not do the same because of lack of capital. Therefore, to have more capital, they admitted Govind as a new partner on 1.1.2010. Govind brought Rs 10,00,000 as capital and the new profit sharing ratio decided was 3:2:5. On 1.1.2012, another new partner Hari was admitted with a capital of Rs 8,00,000 for the 1/10th share in the profits, which he acquired equally from Uday, Kaushal and Govind. On 1.4.2014 Govind died and his share was taken over by Uday and Hari equally. Calculate :

(1) The sacrificing ratio of Uday and Kaushal on Govind's admission.
(2) New profit sharing ratio of Uday. Kaushal, Govind and Had on Hari's admission.
(3) New profit sharing ratio of Uday, Kaushal and Hari on Govind's death.

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Solution

1) Calculation of Sacrificing Ratio of Uday and Kaushal on Govind’s admission
Old Ratio of Uday and Kaushal = 1:1
New Ratio of Uday and Kaushal and Govind = 3:2:5
Sacrificing Ratio = Old Ratio – New Ratio

Uday Sacrifice = `1/2 - 3/10 = 2/10`

Kaushal Sacrifice = `1/2 - 2/10 = 3/10`

Sacrificing Ratio = 2:3

2) Calculation of New Profit Sharing Ratio of Uday, Kaushal, Govind and Hari on Hari’s admission

Old Ratio of Uday, Kaushal and Govind = 3:2:5

Hari was admitted for 1/10th share, which was acquired by him equally from Uday, Kaushal and Govind.

Sacrificing Share

Uday = `1/3 xx 1/10 = 1/10`

Kaushal = `1/3 xx 1/10 = 1/30`

Govind = `1/3 xx 1/10 = 1/30`

New Profit Share = Old Share - Sacrificing Share

Uday = `3/10 - 1/10 = 8/30`

Kaushal = `2/10 - 1/10 = 5/30`

Govind = `5/10 - 1/20 = 14/30`

Hari = `1/10 or 3/30`

Therefore, New Profit Sharing Ratio of Uday, Kaushal, Govind and Hari = 8:5::14:3

3) Calculation of New Profit Sharing Ratio of Uday, Kaushal and Hari on Govind’s death Old Ratio of Uday, Kaushal, Govind and Hari = 8:5:14:3

Govind died and his share `(14/30)` is acquired by Uday and Hari equally

Share Acquired

Uday = `1/2 xx 14/30 = 14/60`

Hari = `1/2 xx 14/30 = 14/60`

New Profit Share = Old Share + Share Acquired

Uday = `8/30 + 14/60 = 30/60`

Hari = `3/30 + 14/60 = 20/60`

kaushal =  `5/30 or 10/60`

Therefore, New Profit Sharing Ratio of Uday,kaushal and Hari =30:10:20 or 3:1:2

Concept: Admission of a Partner - Sacrifice Ratio and New Ratio
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