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A and B are partners sharing profits in the ratio of 7:3. C is admitted as a new partner. ‘A’ surrenders 1/7 of his share and ‘B’ surrenders 1/3rd of his share in favour of C. The new profit sharing ratio will be:
- a)6:2:2
- b)4:1:1
- c)3:2:2
- d)None
Correct answer is option 'A'. Can you explain this answer?
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A and B are partners sharing profits in the ratio of 7:3. C is admitte...
There are two possible scenarios:
Scenario 1: C is admitted with a share of profits
Let C's share of profits be x. Then the new profit sharing ratio will be:
A:B:C = 7:3:x
We know that the total profit is divided among the partners in their respective ratios. So, we can write:
7x + 3x = Total Profit
Simplifying, we get:
10x = Total Profit
Now, let's say the total profit is P. Then:
10x = P
So, C's share of profits (x) will be:
x = P/10
And the new profit sharing ratio will be:
A:B:C = 7:3:P/10
Scenario 2: C is admitted with a capital contribution
Let C's capital contribution be y. Then the new profit sharing ratio will be:
A:B:C = 7:3: (y/Total Capital)
We know that the total capital of the firm will be:
Total Capital = A's Capital + B's Capital + C's Capital
So, C's capital contribution (y) will be:
y = (Total Capital * 3)/10
And the new profit sharing ratio will be:
A:B:C = 7:3:(3/10) * (Total Capital)
Note that in this scenario, the total profit is not relevant as C's share of profits will be based on their capital contribution.
Scenario 1: C is admitted with a share of profits
Let C's share of profits be x. Then the new profit sharing ratio will be:
A:B:C = 7:3:x
We know that the total profit is divided among the partners in their respective ratios. So, we can write:
7x + 3x = Total Profit
Simplifying, we get:
10x = Total Profit
Now, let's say the total profit is P. Then:
10x = P
So, C's share of profits (x) will be:
x = P/10
And the new profit sharing ratio will be:
A:B:C = 7:3:P/10
Scenario 2: C is admitted with a capital contribution
Let C's capital contribution be y. Then the new profit sharing ratio will be:
A:B:C = 7:3: (y/Total Capital)
We know that the total capital of the firm will be:
Total Capital = A's Capital + B's Capital + C's Capital
So, C's capital contribution (y) will be:
y = (Total Capital * 3)/10
And the new profit sharing ratio will be:
A:B:C = 7:3:(3/10) * (Total Capital)
Note that in this scenario, the total profit is not relevant as C's share of profits will be based on their capital contribution.
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A and B are partners sharing profits in the ratio of 7:3. C is admitted as a new partner. ‘A’ surrenders 1/7 of his share and ‘B’ surrenders 1/3rd of his share in favour of C. The new profit sharing ratio will be:a)6:2:2b)4:1:1c)3:2:2d)NoneCorrect answer is option 'A'. Can you explain this answer?
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A and B are partners sharing profits in the ratio of 7:3. C is admitted as a new partner. ‘A’ surrenders 1/7 of his share and ‘B’ surrenders 1/3rd of his share in favour of C. The new profit sharing ratio will be:a)6:2:2b)4:1:1c)3:2:2d)NoneCorrect answer is option 'A'. Can you explain this answer? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about A and B are partners sharing profits in the ratio of 7:3. C is admitted as a new partner. ‘A’ surrenders 1/7 of his share and ‘B’ surrenders 1/3rd of his share in favour of C. The new profit sharing ratio will be:a)6:2:2b)4:1:1c)3:2:2d)NoneCorrect answer is option 'A'. Can you explain this answer? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A and B are partners sharing profits in the ratio of 7:3. C is admitted as a new partner. ‘A’ surrenders 1/7 of his share and ‘B’ surrenders 1/3rd of his share in favour of C. The new profit sharing ratio will be:a)6:2:2b)4:1:1c)3:2:2d)NoneCorrect answer is option 'A'. Can you explain this answer?.
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