Question

John and Harry were partners in a firm sharing profits and losses in the ratio of 2 : 1. On 1stApril, 2023, they admitted Dinesh as a new partner for \(\frac{1}{4}\) share in the profits of the firm with a guarantee that his share in the profits shall be at least \(₹1,00,000\). The net profit of the firm for the year ended 31stMarch, 2024 was \(₹2,80,000\). John’s share in the profits of the firm after giving the guaranteed amount of profit to Dinesh will be :

• A. \(₹ 1,40,000\)
• B. \(₹1,20,000\)
• C. \(₹1,00,000\)
• D. \(₹70,000\)

Hint:

Always subtract guaranteed amounts first, then distribute the balance among old partners.

Answer 1

The Correct Option is B

Total profit = \(₹2,80,000\)
Dinesh’s normal share = \(\frac{1}{4} \times 2,80,000 = ₹70,000\)
He is guaranteed \(₹1,00,000\). Deficiency = \(₹30,000\)
This deficiency is borne by John and Harry in their old ratio = 2 : 1
John’s share of deficiency = \(\frac{2}{3} \times 30,000 = ₹20,000\)
Harry’s share of deficiency = \(₹10,000\)
John’s share in remaining profit = \(\frac{2}{3} \times (2,80,000 - 1,00,000) = ₹1,20,000\)
Therefore, John’s final share = \(₹1,20,000 - 20,000 = ₹1,00,000\)
Wait! Let’s check carefully: Remaining profit after giving Dinesh = \(2,80,000 - 1,00,000 = ₹1,80,000\)
John’s share from remaining = \(\frac{2}{3} \times 1,80,000 = ₹1,20,000\)
Less his share of deficiency (\(₹20,000\))
Thus, John’s share = \(₹1,00,000\)
Hence, correct answer is (C).
Correction: The answer is (C) \(₹1,00,000\).