X and Y are partners sharing profits in the ratio 3:2. Z is entered into the business for 1/4th share of profits, with the guarantee of minimum profits of ₹30,000. Profit earned by the business for the year ended March 31st, 2024 is ₹1,00,000. Amount of deficiency, if any, will be borne by:
Answer & explanation
Correct answer: option 3
The correct answer is option 3- ₹5,000 will be borne by X and Y in 3:2 ratio.
X and Y = 3:2.
Z admits = 1/4th with the guarantee of minimum profits of ₹30,000.
Let total share = 1
Remaining share after Z = 1-1/4
= 3/4
This 3/4th is divided between X & Y in ratio of 3:2
X's new share = 3/4 x 3/5
= 9/20
Y's new share = 3/4 x 2/5
= 6/20
New ratio = 9/20 : 6/20 : 1/4
= 9:6:5
Profit = ₹1,00,000.
Z share in profit = 1,00,000 x 5/20
= 25,000
Guaranteed profit = 30,000
Deficiency = 30,000 - 25,000
= 5,000
This 5,000 amount of deficiency will be borne by old partners i.e. X & Y in their old ratio i.e. 3:2.