Accountancy Part AAdmission of a Partner

A and B share profits and losses in the ratio of 2: 1. They admit C a…

A and B share profits and losses in the ratio of 2: 1. They admit C as partner with 1/4th share in profits with a guarantee that his share of profit shall be at least ₹50,000. The net profit of the firm for the year ending March 31^st, 2022 was ₹2,40,000. Determine C's share in profits.

Answer & explanation

Correct answer: option 2

The correct answer is Option (2) → ₹60,000

C’s share as per ratio = ₹2,40,000 × 1/4 = ₹60,000

Guaranteed minimum = ₹50,000

₹60,000 is more than the guarantee, so there is no deficiency for A and B to bear and C gets ₹60,000.

NCERT (2026-27 edition):
Guarantee of Profit to a Partner – “Mohit and Rohan share profits and losses in the ratio of 2:1. They admit Rahul as partner with 1/4 share in profits with a guarantee that his share of profit shall be at least Rs. 50,000. The net profit of the firm for the year ending March 31, 2015 was Rs. 1,60,000. Prepare Profit and Loss Appropriation Account.”