LUSTRATION 2.
A, B and C were partners in a firm sharing profits and losses in the ratio of 3:2:1
The partners decide to share future profits and losses in the ratio of 2:2:1. Indicate
indicate partner's gain or sacrifice due to change in ratio.
Answers
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Explanation:
Case 1.
Calculation of new profit sharing ratio:
A's new ratio= old ratio-sacrifice
= 5/10-1/5
= 3/10
B's ratio= 4/10
C's new ratio= 1/10+1/5
= 3/10
New ratio= 3:4:3
Calculation of sacrificing ratio:
A's sacrifice= 1/5
C's gain= 1/5
Case 2.
Calculation of new profit sharing ratio:
A's new ratio= 5/10-1/5
= 3/10
B's new ratio= 4/10-1/5
= 2/10
C's new ratio= 1/10+1/5+1/5
= 5/10
New ratio= 3:2:5
Calculation of sacrificing ratio:
A's sacrifice= 1/5
B's sacrifice= 1/5
Ratio= 1:1
C's gain= 1/5+1/5
= 2/5
Case 3.
New profit sharing ratio= 1:1:1
Calculation of sacrificing ratio:
A's sacrifice= 5/10-1/3
= 5/30
B's sacrifice= 4/10-1/3
= 2/30
Sacrificing ratio= 5:2
C's gain= 7/30
Case 4.
Calculation of sacrificing ratio:
A's sacrifice= 5/10 * 1/10
= 5/100
B's sacrifice= 4/10 * 1/2
= 4/20
Sacrificing ratio= 5:20 = 1:4
Calculation of new profit sharing ratio:
A's new share= 5/10-5/100
= 9/20
B's new share= 4/10-4/20
= 4/20
C's new share= 5/100+4/20
= 25/100
New ratio= 45:20:25
= 9:4:5