On 1st April 1996 X,Y and Z started a business in partnership. X contributes 90000 at first but then withdraws 30000 at the end of the 6 months Y introduces 75000 at first & increases it to 90000 at the end of four months but withdraws 30000 at the end of 9 monthZ brings in 75000 at first but increases it by 60000 by the end of 7 months.
During the year ending 31 march 2007 the net profit is 42000.show how the partners should divide the amount in the basis of capital employed by each partner.
(1) Calculation of Capital Ratio
Total Capital Employed by X |
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Date |
Capital (Rs) |
Months for which capital was employed in the business |
Product (Rs) |
01/04/2015 |
90,000 |
6 |
5,40,000 |
30/09/2015 |
60,000 (90,000 – 30,000) |
6 |
3,60,000 |
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9,00,000 |
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Total Capital Employed by Y |
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Date |
Capital (Rs) |
Months for which capital was employed in the business |
Product (Rs) |
01/04/2015 |
75,000 |
4 |
3,00,000 |
31/07/2015 |
90,000 (75,000+15,000) |
5 |
4,50,000 |
31/12/2015 |
60,000 (90,000 – 30,000) |
3 |
1,80,000 |
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9,30,000 |
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Total Capital Employed by Z |
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Date |
Capital (Rs) |
Months for which capital was employed in the business |
Product (Rs) |
01/04/2015 |
75,000 |
7 |
5,25,000 |
31/10/2015 |
1,35,000 (75,000+60,000) |
5 |
6,75,000 |
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12,00,000 |
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So capital ratio of X, Y and Z is 9,00,000:9,30,000:12,00,000 or 30:31:40.
(2) Distribution of Profit
Profit of Rs 42,000, is distributed between X, Y and Z in the ratio of 30:31:40.