Question

Partners A, B, and C share the profits of a business in the ratio of 3 : 2 : 1 respectively. They admit D, who brings in ₹ 60,000 for his share of goodwill. A, B, C, and D decide to share the profits respectively in the ratio of 5 : 3 : 2 : 2. Credit will be given to ______.

Options

• A ₹ 6,000; B ₹ 6,000

• A ₹ 30,000; B ₹ 18,000; C ₹ 12,000

• A ₹ 30,000; B ₹ 20,000; C ₹ 10,000

• A ₹ 30,000; B ₹ 30,000

Answer 1

Partners A, B, and C share the profits of a business in the ratio of 3 : 2 : 1 respectively. They admit D, who brings in ₹ 60,000 for his share of goodwill. A, B, C, and D decide to share the profits respectively in the ratio of 5 : 3 : 2 : 2. Credit will be given to A ₹ 30,000; B ₹ 30,000.

Explanation:

Calculate the Sacrificing/Gaining Share for Each Partner:

A’s Share = `3/6 - 5/12`

= `(3 xx 2)/(6 xx 2) - 5/12`

= `6/12 - 5/12`

= `1/12` (Sacrifice)

B’s Share = `2/6 - 3/12`

= `(2 xx 2)/(6 xx 2) - 3/12`

= `4/12 - 3/12`

= `1/12` (Sacrifice)

C’s Share = `1/6 - 2/12`

= `(1 xx 2)/(6 xx 2) - 2/12`

= `2/12 - 2/12`

= 0 (Neither Sacrifice nor Gain)

Sacrificing Ratio of A and B = `1/2 : 1/2` or 1 : 1

The entire ₹ 60,000 is distributed to A and B in their sacrificing ratio of 1 : 1. C does not receive any goodwill, as he did not sacrifice his share.

Amount credited to A = `60,000 xx 1/2`

= 30,000

Amount credited to B = `60,000 xx 1/2`

= 30,000