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 Rs60,000 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 which partner?
Answer & explanation
Correct answer: option 4
Old ratio is 3:2:1
New ratio is 5:3:2:2
Sacrifice of A =3/6 - 5/12
= 1/12
Sacrifice of B = 2/6 -3/12
= 1/12
Sacrifice of C = 1/6 -2/12
= 0
Sacrifice made by A and B only in 1:1 ratio. Thus, goodwill will be credited to their account only.
A = 60,000 x 1/2 = ₹30,000
B = 60,000 x 1/2 = ₹30,000