A partnership consists of partners X, Y, and Z with capitals ₹70,000, ₹90,000, and ₹50,000 respectively, and a profit‑sharing ratio of 4:3:2. After 3 years, partner W joins with ₹25,000 capital. The partners agree that W will receive 10% interest on his capital for the period he is admitted, and the new profit ratio will be 6:5:4:3 (X : Y : Z : W). If the partnership earns a profit of ₹70,000 during the year of admission, calculate (i) the total interest payable to W, (ii) the profit share of each partner after admission.
Answer
Interest ₹2,500; Profit shares – X ₹23,333, Y ₹19,444, Z ₹15,556, W ₹11,667
The correct answer is Interest ₹2,500; Profit shares – X ₹23,333, Y ₹19,444, Z ₹15,556, W ₹11,667 — Round each share to nearest rupee.
Step-by-step solution
- Interest on W: ₹25,000 × 10% × 1 = ₹2,500.
- Total new ratio: 6+5+4+3 = 18.
- Calculate X’s share: (6/18) × ₹70,000 = ₹23,333.33 (₹23,333).
- Calculate Y’s share: (5/18) × ₹70,000 = ₹19,444.44 (₹19,444).
- Calculate Z’s share: (4/18) × ₹70,000 = ₹15,555.56 (₹15,556).
- Calculate W’s share: (3/18) × ₹70,000 = ₹11,666.67 (₹11,667).
- Round each share to nearest rupee.
Common mistake: Mis‑adding the ratio parts or miscalculating fractions
Concept tested: Interest on admission and new profit split
Published · How this solution was prepared and checked
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