Vijay and Manohar share profits and losses in the ratio of 2:1. They admit Prakash as a partner with 1/4 share in profits with a guarantee that his share of profit will be at least ₹50,000. The net profit of the firm for the year ending March 31, 2015, was ₹1,60,000. Calculate the amount of profit Vijay will get:
Answer & explanation
Correct answer: option 2
The correct answer is option 2- ₹73,333.
Vijay and Manohar = 2:1
Prakash admit = 1/4
Total share = 1
Remaining share after Prakash = 1-1/4
= 3/4
This 3/4 is divided into Vijay and Manohar in 2:1.
Vijay new share = 3/4 x 2/3
= 6/12
Manohar new share = 3/4 x 1/3
= 3/12
New ratio = 6/12 : 3/12 : 1/4
= 6/12 : 3/12 : 3/12 i.e. 6:3:3 or 2:1:1
Net profit = 1,60,000
Vijay's profit share = 1,60,000 x 2/4
= 80,000
Manohar's profit share = 1,60,000 x 1/4
= 40,000
Prakash's profit share = 1,60,000 x 1/4
= 40,000
Prakash guaranteed profit is 50,000. So, deficiency = 50,000 - 40,000
= 10,000
This 10,000 is borne by old partners in their old ratio i.e. 2:1
Vijay borne deficiency = 10,000 x 2/3
= 6666.66 or 6,667
So, Vijay net share in profit = 80,000 - 6,667
= ₹73,333