Partners R and S have capital balances of ₹9,00,000 and ₹6,00,000 respectively. Their profit‑sharing ratio is 3:2 and the partnership earned a profit of ₹1,20,000 for the year. Partner S retires and is bought out at book value. How much amount is payable to S?

Step-by-step solution

1. Calculate S's share of profit: profit $\times$ S's profit ratio = 1,20,000 $\times$ $2/(3+2)$ = ₹48,000.
2. Add S's share of profit to his capital balance to get the book value: ₹6,00,000 + ₹48,000 = ₹6,48,000.
3. Since the buy‑out is at book value, no goodwill or premium is added.
4. Therefore, the amount payable to the retiring partner S is ₹6,48,000.

Concept tested: Buy‑out at book value (retirement)

Published 27 September 2026 · How this solution was prepared and checked