CA CPT-Accounts Revision Sheet - Partnership Accounts-Admission of New Partner

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CA CPT-Accounts Revision Sheet - Partnership Accounts-Admission of New Partner

  1. 1. CHAPTER-8 Partnership Accounts Unit-3 Admission of New PartnerConcept: Calculation of New Profit Sharing Ratio.Case 1) If the New Partner ‘s share is given and nothing else given in the question.Explanation. In such case it is presumed that the remaining partners will share rest of the profit in their old ratio. E.g. A & B are partners sharing profit & loss in the ratio of 2:1.They admit a new partner C for 1/6th share of profits. Calculate new profit sharing ratio.Solution:. Let the total share is 1 And the new partner C taken 1/6th share out of 1 Then remaining share is 1-1/6 =5/6So, A’s new share=5/6×2/3=5/9 B’s new share =5/6×1/3=5/18 A:B:C=5/9:5/18:1/6=10/18:5/18:3/18 =10:5:3MCQ,s1) X & Y partners sharing P&L in ratio of 3:2.they admit C into partnership for ¼ sharein profits .Calculate new profit sharing ratio. a)9:6:5 b)5:6:9 c)2:2:1 d) 1:1:12) X & Y partners sharing P&L in ratio of 1:3..they admit A into partnership for ¼ share in profits .Calculate new profit sharing ratio. a)16:48:22 b)1:3:4 c) 4:9:3 d) 3:9:43) X & Y partners sharing P&L in ratio of 3:2..they admit Z into partnership for 1/3 share in profits .Calculate new profit sharing ratio. a)3:2:1 b)1:2:3 c)5:4:6 d)6:4:5VXplain to score more-post your doubts at vxplain@gmail.com / www.Vxplain.com Page 1
  2. 2. Key1) (a) 2) (d) 3) (d)Case. 2 If new partner purchase his share of profit from the old partner in a particular ratio.Explanation. In such case New profit sharing ratio of the old partners will be calculated by deducting the proportion given to the new partner from the share of old partner. E.g. A & B partners sharing P&L in ratio of 7:5.They admit C into partnership for 1/6 share of profits. He acquires this share as 1/24th from A & 1/8 from B.Calculate new profit sharing ratio.Solution:. When the new partner C acquires 1/6th share of profits in which he take 1/24 from A & 1/8 from B. Therefore A’s share of profit=7/12-1/24=14-1/24=13/24 B’s share of profit=5/12-1/8=10-3/24=7/24 C’s share of profit=1/6*4/4=4/24 Hence A, B & C’s share of profit is 13/24:7/24:4/24=13:7:4MCQ’s1) A & B partners sharing P&L in ratio of 7:3.They admit C into partnership for 3/7 share of profits. He acquires this share as 1/7 from A & 2/7 from B.Calculate new profit sharing ratio. a) 7:3:3 b) 4:2:3 c) 10:7:5 d) 39:1:302) A & B partners sharing P&L in ratio of 7:3..They admit C into partnership for 3/7 share of profits. He acquires this share as 2/7 from A & 1/7 from B.Calculate new profit sharing ratio. a) 7:3:3 b) 4:2:3 c) 14:6:15 d) 29:11:30 Key 1) (d) 2) (d)Case.3) When old partner surrenders a particular proportion of his share in favour of a new partner.Explanation. In such a case, First of all surrender portion is to be calculated for each partner and then this will be deducted from his old profit sharing ratio in order to calculate his new profit sharing ratio. E.g. A & B partners sharing P&L in ratio of 3:7.They admit C into partnership for which A surrendered 1/3rd of his share & B surrendered 1/7th of his share in favour of C. Calculate new profit sharing ratio.VXplain to score more-post your doubts at vxplain@gmail.com / www.Vxplain.com Page 2
  3. 3. Solution:. A’s old ratio is 3/10th He surrendered 1/3rd of his share i.e1/3 of 3/10=1/10 A’s new share is 3/10-1/10=2/10 B’s old share is 7/10 He surrendered 1/7th of his share i.e1/7 of 7/10=1/10 B’s new share is 7/10-1/10=6/10 C’s share of profit =1/10+1/10=2/10 Proportion of profit=A:B:C=2/10:6/10:2/10 =2:6:2MCQ’s1) A & B partners sharing P&L in ratio of 7:3.They admit C into partnership for which A surrendered 1/7thof his share & B surrendered 1/3rd of his share in favour of C. Calculate new profit sharing ratio. a) 6:2:2 b) 4:1:1 c) 3:2:2 d) none of these Key. 1) (a)Case.4) If new partner acquires his share from the old partners in a particular ratio:Explanation. In such case it is necessary to calculate the fraction of share which he got from each partner. This fraction should be deducted from the share of old partner in to calculate the new profit sharing ratio. E.g.: A & B partners sharing P&L in ratio of 3:1.They admit C into partnership for 1/4th which he acquires in the ratio of 2:1 From A & B Calculate new profit sharing ratio.Solution. C get from A=1/4×2/3=2/12=2/12 & C gets from B1/4×1/3=1/12 A’s share of profit=3/4-2/12=7/12 B’s share of profit=1/4-1/12=2/12 New profit sharing ratio is 7/12:2/12:1/4 =7/12:2/12:3/12=7:2:3MCQ’s1 P & Q partners sharing P&L in ratio of 3:2.They admit R into partnership for 1/5 th which he acquires in the ratio of 1:1 From P & Q. Calculate new profit sharing ratio. a) 2:2:1 b) 5:3:2 c) 8:12:5 d) 3:5:2Key1) (b)VXplain to score more-post your doubts at vxplain@gmail.com / www.Vxplain.com Page 3
  4. 4. Case.5) When Old Partner retains his sharee.g X,Y & Z are partners sharing profits & losses in the ratio of 3:2:1. W is admitted with 1/6share in profits. Z would retain his original share. Find out new profit sharing ratio.Solution. Let the total share be =1 Share of Z & W = 1/6+1/6=1/3 Remaining Share =1-1/3=2/3 X’s Share =3/5 2/3=6/15 Y’s Share =2/5×2/3=4/15 New Ratio of X,Y,Z&W=6/15+4/15+1/6+1/6 =12:8:5:5MCQ’s1) X,Y & Z are partners sharing profits & losses in the ratio of 1:1:1. W is admitted with ¼ share in profits. Z would retain his original share. Find out new profit sharing ratio. a) 5:5:8:6 b) 6:8:5:5 c) 4:3:2:1 d) None of aboveCase.6) Sacrificing Ratio Sacrificing ratio=Old ratio – New RatioCase.a) when new profit sharing ratio is given.e.g. X & Y are partners sharing profits & losses in the ratio of 5:3. They admit Z into partnership. The new ratio of the partner is agreed to be 4:2:1.Calculate sacrificing ratio.Solution. Sacrificing ratio=Old ratio – New Ratio X’s=5/8-4/7=35-32/56=3/56 Y’s=3/8-2/7=21-16/56=5/36 Ratio of Sacrifice=3:5MCQ’s1) X & Y are partners sharing profits & losses in the ratio of 2:3. They admit Z into partnership. The new ratio of the partner is agreed to be 5:3:2. Calculate sacrificing ratio. a) 1:1 b) 2:3 c) 3:2 d) None of theseCase.b) If New ratio is not given and nothing is specified for sacrificing ratio then old profit sharing ratio is sacrificing ratio.VXplain to score more-post your doubts at vxplain@gmail.com / www.Vxplain.com Page 4

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