Question

X and Y are partners sharing profits in the ratio of 4:3. Z is admitted for 1/6 share in profits. Their capitals were Rs. 50,000 and 40,000 respectively. It is also agreed that Z’s capital should be proportionate to her profit sharing ratio. Find out the amount to be brought in by Z as capital.

Answer 1

Share of Profit of Z = \(\frac{1}{6}\) 

Share of profit of X and Y = 1 –\(\frac{1}{6} = \frac{5}{6}\) 

Total capital of X & Y= 50,000+ 40,000 = 90,000 

Capital of X and Y for \(\frac{5}{6}\) share = 90,000 

∴ Total capital of X, Y and Z = 90,000× \(\frac{6}{5}\) = 1,08,000 

∴ Capital to be brought in by Z = 1,08,000 – 90,000 or 1,08,000 × \(\frac{1}{6}\) = 18,000.