A, B and C are partners. They admit D as a partner and gurantee that his share of profit shall not be less than Rs. 20,000 p.a. Profits are to be shared in the ratio of 4 : 3 : 3 : 2 respectively. If total profits for a year were Rs. 96,000, A's share of profits will be:
A. Rs. 30,400.00
B. Rs. 32,000.00
C. Rs. 33,777.78
D. Rs. 24,000.00
Answer: Option A
Solution (By Examveda Team)
A, B, C and D share profits in the ratio 4 : 3 : 3 : 2.Total of ratio = 4 + 3 + 3 + 2 = 12
Total profit = Rs. 96,000
D’s share as per ratio = 96,000 × (2/12) = Rs. 16,000
But D is guaranteed a minimum profit of Rs. 20,000.
So, deficiency = 20,000 − 16,000 = Rs. 4,000
This deficiency is borne by A, B and C in their old ratio (4 : 3 : 3).
Total of old ratio = 4 + 3 + 3 = 10
A’s share of deficiency = 4/10 × 4,000 = Rs. 1,600
A’s original share = 96,000 × (4/12) = Rs. 32,000
Final share of A = 32,000 − 1,600 = Rs. 30,400
Therefore, A’s share of profit = Rs. 30,400.
This Question Belongs to Commerce >> Accounting
Profit = 96000 - 20000 = 76000
A's Share of Profit = 4/10
A's share of profit = 76000 * 4/10 = 30400