A, B and C were partner's in a firm sharing profit and losses in the Ratio of 5 : 3 : 2. They admitted D into partnership for 1/5 share of profit which he takes equally from A and B. D brought sufficient amount of goodwill in cash Capital brought in by is Rs. 50,000. On the date of admission the Balance Sheet of A, B and C was as follows :
Balance Sheet as on 31st March, 2021
| Liability | Rs. | Assets | Rs. |
|---|---|---|---|
| Capital | Building and Furniture | 1,50,000 | |
| A 1,00,000 | Debtors 55,000 | ||
| B 60,000 | Provision 5,000 | 50,000 | |
| C 40,000 | 2,00,000 | Cash | 20,000 |
| Creditors | 50,000 | Profit and Loss (2020-21) | 30,000 |
| 2,50,000 | 2,50,000 |
Goodwill is to be valued at 3 years purchase of average profit of last 4 years which were Rs. 60,000 (2017-18), Rs. 60,000 (18-19), Rs. 30,000 (19-20). On revaluation it was found that all debtors are good.
What would be the new Profit Sharing Ratio :
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → 2 : 1 : 1 : 1
D takes 1/5 of the profits equally from A and B, so each of them gives up 1/10; C gives up nothing.
A's new share = 5/10 − 1/10 = 4/10
B's new share = 3/10 − 1/10 = 2/10
C's new share = 2/10
D's share = 1/5 = 2/10
New ratio A : B : C : D = 4 : 2 : 2 : 2 = 2 : 1 : 1 : 1
The ratio 4 : 1 : 1 : 1 would follow only if D took his whole share from B alone.
NCERT (2026-27 edition):
NCERT (2026-27 edition): |
