Lesson eLearning

Partners S and T have capitals ₹80,000 and ₹120,000 respectively, with a profit‑sharing ratio of 5:3. After 2 years, partner U joins with ₹50,000 capital. The partners agree that U will receive 7% interest on his capital for the period he is admitted, and the new profit ratio will be 4:3:3 (S : T : U). If the partnership makes a profit of ₹40,000 during the year of admission, which partner receives the largest share of the profit?

medium MCQ 3 marks Class 12 · Accountancy · Reconstitution of Partnership Firm Admission of Partner
  1. S
  2. T
  3. U
  4. All equal
Answer
S

The correct answer is S — Compare the amounts – S has the largest share.

Step-by-step solution

  1. Compute interest for U: ₹50,000 × 7% × 1 = ₹3,500 (not needed for profit share).
  2. Find total ratio: 4+3+3 = 10.
  3. Calculate shares: S = (4/10) × ₹40,000 = ₹16,000.
  4. T = (3/10) × ₹40,000 = ₹12,000.
  5. U = (3/10) × ₹40,000 = ₹12,000.
  6. Compare the amounts – S has the largest share.
Common mistake: Choosing the partner with highest capital instead of highest share ratio

Concept tested: Profit sharing after admission

Published · How this solution was prepared and checked

← All Reconstitution of Partnership Firm Admission of Partner questions