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On closing the firm, a profit of ₹35,000 was earned. If the two partners’ profit-sharing ratio is 3:7, how much of the profit will be received by the partner with the larger share?

Answer and explanation

Correct answer: ₹24,500

The total ratio is 3 + 7 = 10. The partner with the larger share is entitled to 7/10 of the profit. Therefore, the share is ₹35,000 × 7/10 = ₹24,500. ₹21,000 corresponds to 3/5 of the profit and does not represent the larger partner’s share. Exam tip: To calculate a partner’s share, divide that partner’s ratio by the total ratio and multiply by the total profit.

Related tags

Partnership RatioProfit SharingDissolution Of FirmClosing BusinessAccounting CalculationsClosing The BusinessDissolution Of A Partnership FirmAccountancy

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