Calculate Investment Difference from Profit Share
Profit sharing in a business partnership is typically proportional to the investment made by each partner. We can use Kunal's share of the total profit to determine his share of the total investment.
1. Determine Kunal's Profit Share Ratio
The ratio of Kunal's profit to the total profit represents his share in the business.
Kunal's Profit Share Ratio = $ \frac{\text{Kunal's Profit}}{\text{Total Profit}} $
Kunal's Profit Share Ratio = $ \frac{₹6,300}{₹19,500} = \frac{63}{195} $
Simplifying the fraction by dividing the numerator and denominator by 3:
Kunal's Profit Share Ratio = $ \frac{63 \div 3}{195 \div 3} = \frac{21}{65} $
2. Calculate Kunal's Investment
Since the profit share is proportional to the investment, Kunal's investment is the same fraction of the total investment.
Kunal's Investment = Kunal's Profit Share Ratio $ \times $ Total Investment
Kunal's Investment = $ \frac{21}{65} \times ₹36,400 $
Kunal's Investment = $ 21 \times \frac{36400}{65} $
Kunal's Investment = $ 21 \times 560 $
Kunal's Investment = $ ₹11,760 $
3. Calculate Anshuman's Investment
Anshuman's investment is the remaining amount from the total investment.
Anshuman's Investment = Total Investment $ - $ Kunal's Investment
Anshuman's Investment = $ ₹36,400 - ₹11,760 $
Anshuman's Investment = $ ₹24,640 $
4. Calculate the Difference Between Investments
The difference is found by subtracting the smaller investment from the larger one.
Difference = Anshuman's Investment $ - $ Kunal's Investment
Difference = $ ₹24,640 - ₹11,760 $
Difference = $ ₹12,880 $
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Important Questions from Partnership
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When the incoming partner cannot bring premium for goodwill, then the necessary adjustment for goodwill is done through which one of the following?
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