Understanding Partnership Changes: Admission of a New Partner
When a new partner is admitted into an existing partnership firm, it signifies a change in the relationship between the partners. Let's break down the effects:
Effect on the Partnership Agreement
A partnership firm is based on an agreement between the existing partners. This agreement outlines the profit-sharing ratio, capital contributions, management roles, and other terms. The admission of a new partner requires the consent of all existing partners. This admission fundamentally alters the terms of the original agreement.
Because the original terms are changing to include a new member and potentially a new profit-sharing arrangement, the old agreement is legally considered to end. However, this doesn't necessarily mean the business itself stops operating. Instead, a new partnership agreement is formed, incorporating the new partner and the revised terms.
Partnership vs. Firm
It's important to distinguish between the 'firm' and the 'partnership':
- Partnership: Refers to the relationship between the partners who have agreed to share the profits of a business. This is governed by the partnership agreement.
- Firm: Refers to the business entity or the business itself that carries out the partnership's objective.
The admission of a new partner leads to the dissolution of the *old partnership* (the previous agreement and relationship) and the creation of a *new partnership* (a new agreement and relationship including the new partner). The firm itself, as a business entity, continues to exist, albeit under new terms and potentially with a new name or structure.
Analysis of Options
- Old firm is dissolved: This is often incorrect. The business (firm) usually continues its existence.
- Old firm and old partnership is dissolved: This is incorrect because the firm typically does not dissolve.
- Old partnership is reconstituted: This is the most accurate description. The original partnership agreement ends, and a new one is formed, effectively reconstituting the partnership.
- Firm will lose its existence: This is incorrect, as the business entity generally continues.
Therefore, the admission of a new partner results in the reconstitution of the old partnership.
Important Questions from Partnership
Three partners X, Y and Z started their business by investing ₹40,000, ₹38,000 and ₹30,000, respectively. After 6 months, X and Z made additional investments of ₹20,000 and ₹15,000 respectively, whereas Y withdrew ₹8,000. Find the share of Y (in ₹) in the total profit of ₹38,880 made at the end of the year.
A, B and C invested their capitals in the ratio 2 ∶ 3 ∶ 5. The ratio of months for which they invested is 4 ∶ 2 ∶ 3, respectively. If the difference between the profit shares of A and B is Rs. 1,86,000, then C's share of profit (in Rs.) is:
A started a business with a capital of Rs. 54,000 and admitted B and C after 4 months and 6 months, respectively. At the end of the year, the profit was divided among the three in the ratio 1 ∶ 4 ∶ 5. What is the sum (in Rs.) of the capitals invested by B and C?
A, B and C started a business in partnership. Initially, A invested Rs. 29,000, while B and C invested Rs. 25,000 each. After 4 months, A withdrew Rs. 3,000. After 2 more months, C invested Rs. 12,000 more. Find the share of C( in Rs.) in the profit of Rs. 33,200 at the end of the year.
A, B and C invest in a business in the ratio 4 ∶ 5 ∶ 7. C is a sleeping partner, so his share of profits will be half of what it would have been if he were a working partner. If they make Rs 36,000 profit of which 25% is reinvested in the business, how much does B get (in Rs)?
