Multiple choice

X and Y are sharing profits in the ratio of 2: 1. They admitted Z into the firm with 1/4 shares in profits for which he brings 15,000 as his share of capital. The partners decide to have their capitals according to the new profit sharing ratio. As a result, the adjusted capital of Y will be:

  1. 10,000

  2. 15,000

  3. 16,000

  4. 24,000
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Z's share = 1/4, capital = 15,000. Total capital = 15,000 * 4 = 60,000. Remaining share = 3/4. X and Y share in 2:1. X's capital = 60,000 * (3/4) * (2/3) = 30,000. Y's capital = 60,000 * (3/4) * (1/3) = 15,000.

AI explanation

Calculate the new profit sharing ratio by letting Z's 1/4 share leave a remaining 3/4 share for X and Y to divide in their old 2:1 ratio, making the new ratio 2:1:1. Since the total capital proportion for one share unit is found by dividing Z's capital of Rs. 15,000 by his 1 share, Y's adjusted capital for 1 share unit must also be Rs. 15,000.

Keep practicing — related questions