Question

On 1-4-2010 Sahil and Charu entered into partnership for sharing profits in the ratio of 4:3. They admitted Tanu as a new partner on 1-4-2012 for 1/5th share which she acquired equally from Sahil and Charu. Sahil, Charu and Tanue earned profits at a higher rate than the normal rate of return for the year ended 31-3-2013. Therefore, they decided to expand their business. To meet the requirement of additional capital they admitted Puneet as a new partner on 1-4-2013 for 1/7th share of profits which he acquired from Sahil and Charu in 7 : 3 ratio.

Calculate :

(a) New profit sharing ratio of Sahil, Charu and Tanu for the year 2012 - 13.

(b) New profit sharing ratio of Sahil, Charu, Tanu and Puneet on Puneet's admission.

Answer 1

Calculation of new profit sharing ratio :

(a) On the admission of Tanu (2012 - 13)

Sahil's Old share = $\frac{4}{7}$

Sahil's surrender in favour of Tanu = $\frac{1}{5}\times \frac{1}{2}=\frac{1}{10}$

Sahil's new share = $\frac{4}{7}-\frac{1}{10}=\frac{33}{70}$

Charu's old share = $\frac{3}{7}$

Charu's surrender in favour of Tanu = $\frac{1}{5}\times \frac{1}{2}=\frac{1}{10}$

Charu's new share = $\frac{3}{7}-\frac{1}{10}=\frac{23}{70}$

Tanu's share = $\frac{1}{5}\times \frac{14}{14}=\frac{14}{70}$

New profit sharing ratio among Sahil, Charu and Tanu

= $\frac{33}{70}:\frac{23}{70}:\frac{14}{70}=33:23:14$

(b) On Puneet's admission :

Sahil's old share = $\frac{33}{70}$

Sahil's surrender in favour of Puneet = $\frac{1}{7}\times \frac{7}{10}=\frac{7}{70}$

Sahil's new share = $\frac{33}{70}-\frac{7}{70}=\frac{26}{70}$

Charu's old share = $\frac{23}{70}$

Charu's surrender in favour of Puneet = $\frac{1}{7}\times \frac{3}{10}=\frac{3}{70}$

Charu's new share = $\frac{23}{70}-\frac{3}{70}=\frac{20}{70}$

Tanu's share remain the same, i.e., $\frac{14}{70}$

Puneet's share = $\frac{1}{7}\times \frac{10}{10}=\frac{10}{70}$

New profit sharing ratio among partners :

=$\frac{26}{70}:\frac{20}{70}:\frac{14}{70}:\frac{10}{70}$

=$26:20:14:10=13:10:7:5$