A and B are partners in a firm sharing profits in the ratio 2 : 1. C is admitted into the firm with 1/4 share in profits. He will bring in ₹30,000 as capital and capitals of A and B are to be adjusted in the profit sharing ratio. The balance sheet of A and B as on March 31, 2017 (before C's admission ) was as under :

Balance Sheet of A and B as at March 31, 2017

Other terms of agreement are as under :

1. C will bring in ₹12,000 as his share of goodwill.

2. Building was valued at ₹45,000 and Machinery at ₹23,000

3. A provision for bad debts is to be created @6% in debtors.

4. The capital accounts A and B are to be adjusted by opening current accounts.

Calculate New Profit sharing ratio.

2 : 1 : 1

The correct answer is option 3- 2 : 1 : 1.

Old ratio = 2:1
C admits with 1/4th share

Let total share =1
C share =1/4
Remaining share = 1-1/4
                         =3/4

This 3/4 is shared between existing partners in their old ratio.

A's new share = 3/4 x 2/3
                     =1/2

B's new share = 3/4 X 1/3
                        = 1/4

C's share = 1/4

New profit sharing ratio = 1/2 : 1/4 :1/4
                                   = 2/4 :1/4 :1/4
                                   =2:1:1