A and B are partners sharing profits in the ratio of 2:1. C is admitted into the firm for 1/4 share of profits. C brings in ₹20,000 in respect of his capital. The capitals of old partners A and B, after all adjustments relating to goodwill, revaluation of assets and liabilities, etc., are ₹45,000 and ₹15,000 respectively. It is agreed that partners' capitals should be according to the new profit sharing ratio. Determine the new profit sharing ratio.
Answer & explanation
Correct answer: option 2
The correct answer is option 2- 2:1:1.
Old ratio = 2:1 (A & B)
C admits with 1/4
Total share = 1
C's share = 1/4
Remaining share = 1- 1/4
= 3/4
This 3/4 is shared between old partners in old ratio.
New share of A = 3/4 x 2/3
= 6/12
New share of B = 3/4 x 1/3
= 3/12
NEW RATIO = 6/12 : 3/12 :1/4
= 6/12 : 3/12 : 3/12
= 6:3:3
= 2:1:1