Three friends A, B, and C invested Rs. 20,000, Rs. 18,000, and Rs. 14,000, respectively in a business. If at the end of the year they got a profit of Rs. 7,800, then the profit share of B would be:
Rs. 2,700
Understanding Partnership Profit Sharing
In a business partnership, profits are typically shared among partners in proportion to the capital they invest. When the time period of investment is the same for all partners, the ratio of their profit shares is equal to the ratio of their investments.
Calculating the Ratio of Investments
The investments made by the three friends A, B, and C are given:
- Investment of A = Rs. 20,000
- Investment of B = Rs. 18,000
- Investment of C = Rs. 14,000
The ratio of their investments A : B : C is therefore:
\( 20000 : 18000 : 14000 \)
To simplify this ratio, we can divide each term by the greatest common divisor, which is 2000:
\( \frac{20000}{2000} : \frac{18000}{2000} : \frac{14000}{2000} \)
\( 10 : 9 : 7 \)
So, the ratio of investments, and hence the ratio of their profit shares, is \( 10 : 9 : 7 \).
Determining Total Ratio Parts
The total number of parts in the profit sharing ratio is the sum of the individual ratio parts:
\( \text{Total parts} = 10 + 9 + 7 = 26 \)
Calculating B's Profit Share
The total profit earned at the end of the year is Rs. 7,800.
B's share in the profit is represented by 9 parts out of the total 26 parts. We can calculate B's profit share using the formula:
\[ \text{B's Profit Share} = \left( \frac{\text{B's Ratio Part}}{\text{Total Ratio Parts}} \right) \times \text{Total Profit} \]
Substituting the values:
\[ \text{B's Profit Share} = \left( \frac{9}{26} \right) \times 7800 \]
Now, we perform the calculation:
\[ \text{B's Profit Share} = 9 \times \left( \frac{7800}{26} \right) \]
\[ \text{B's Profit Share} = 9 \times 300 \]
\[ \text{B's Profit Share} = 2700 \]
Therefore, the profit share of B would be Rs. 2,700.
Verification (Optional)
We can also calculate the profit shares for A and C to ensure the total adds up to Rs. 7,800.
A's Profit Share = \( \frac{10}{26} \times 7800 = 10 \times 300 = \text{Rs. } 3000 \)
C's Profit Share = \( \frac{7}{26} \times 7800 = 7 \times 300 = \text{Rs. } 2100 \)
Total Profit = A's Share + B's Share + C's Share
Total Profit = \( 3000 + 2700 + 2100 = 7800 \)
This confirms that the calculation is correct and the profit shares are distributed according to the investment ratio.
Conclusion
Based on the investments and the total profit, the profit share of B is Rs. 2,700.
Important Questions from Partnership
Kiran, Vimal and Naveen started a business by investing Rs. 1,35,000, Rs. 1,50,000 and Rs. 1,65,000 respectively. Find the share of each (respectively), out of an annual profit of Rs. 60,000.
When the incoming partner cannot bring premium for goodwill, then the necessary adjustment for goodwill is done through which one of the following?
Which one of the following rights is usually not available to a partner consequent to the dissolution of a firm?
A, B, C invest Rs. 20000, Rs. 30000, Rs. 40000 in a business. After one year, A withdrew his money but B and C continued for one more year. If the net profit after 2 years be Rs. 32000, then A’s share in the profit is:
Manoj received Rs. 6000 as his share out of the total profit of Rs. 9000 which he and Ramesh earned at the end of one year. If Manoj invested Rs. 20000 for 6 months, whereas Ramesh invested his amount for the whole year, what was the amount invested by Ramesh?
