Gold and Silver are partners sharing profits and losses in the

19 :- Gold and Silver are partners sharing profits and losses in the ratio of 2:5. They admit Copper on the condition that he will bring Rs 14,000 as his share of goodwill to be distributed between Gold and Silver. Copper’s share in the future profits and losses will be 1/4th. What will be the new profit-sharing ratio and what amount of goodwill brought in by Copper will be received by Gold and Silver?

Solution:- Calculation of new profit sharing ratio
Old ratio = 2:5
Copper was admitted for 1/4th share
Let the total profit share of the firm be 1
Remaining share = 1 – 1/4 = 3/4
Gold’s new share = 3/4 x 2/7 = 6/28
Silver’s new share = 3/4 x 5/7 = 15/28
Copper’s share = 1/4 x 7/7 = 7/28
Thus, New profit sharing ratio of gold, silver and copper is 6:15:7

Calculation of sacrificing ratio
Old ratio – New ratio
Gold = 2/7 – 6/28 = 2/28 (sacrifice)
Silver = 5/7 – 15/28 = 5/28 (sacrifice)
Thus, Sacrificing ratio of gold and silver is 2:5

Gold and silver will distribute the amount of goodwill brought in by Copper in their sacrificing ratio i.e, 2:5

Gold’s share of goodwill = 14,000 x 2/7 = Rs 4,000
Silver’s share of goodwill = 14,000 x 5/7 = Rs 10,000