Partners P and Q have capitals ₹40,000 and ₹60,000 respectively, with a profit‐sharing ratio of 2:3. After 3 years, partner R joins with ₹20,000 capital. The partners agree that R will receive 6% interest on his capital for the period he is admitted, and the new profit‑sharing ratio will be 3:4:3 (P : Q : R). If the partnership makes a profit of ₹50,000 during the year of admission, calculate (i) the interest payable to R and (ii) the profit share of each partner.
Answer
Interest ₹1,200; Profit shares – P ₹15,000, Q ₹20,000, R ₹15,000
The correct answer is Interest ₹1,200; Profit shares – P ₹15,000, Q ₹20,000, R ₹15,000 — Calculate R’s share: (3/10) × ₹50,000 = ₹15,000.
Step-by-step solution
- Determine the period R is admitted – 1 year.
- Compute R’s interest: ₹20,000 × 6% × 1 = ₹1,200.
- Find total ratio for profit sharing: 3+4+3 = 10.
- Calculate P’s share: (3/10) × ₹50,000 = ₹15,000.
- Calculate Q’s share: (4/10) × ₹50,000 = ₹20,000.
- Calculate R’s share: (3/10) × ₹50,000 = ₹15,000.
Common mistake: Forgetting to apply the 6% interest for the correct period
Concept tested: Interest on admitted partner and new profit sharing
Published · How this solution was prepared and checked
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