Question

A and Bare in partnership, sharing profits in the ratio of 3:2. They take C as a new partner. Goodwill of the firm is valued at 33,00,000 and C brings ₹30,000 as his share of goodwill in cash which is entirely credited to the capital account of A. New profit sharing ratio will be (A)

Answer 1

Answer:

Revalued Goodwill of the firm on Mitali's admission = Rs. 2,00,000

Premium for goodwill brought in cash by Mitali = Rs. 20,000

So, Mitali's share in future profit of the firm = Rs. 20,000/Rs. 2,00,000 = 1/10

Atul's account has only been credited by the premium brought in by Mitali

So, Atul's Sacrificing Share = Profit Share of Mitali = 1/10

New Profit share of Atul = Old profit share - Sacrificing share

New profit share of Atul = 3/5 -1/10 = 5/10

Therefore,

New Profit Sharing Ratio = 5/10:4/10:1/10 = 5:4:1.