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Profit of Rs 1,50,000 was wrongly shared in the ratio 3:2:1 instead of the correct ratio 2:3:1. How much more will B receive on adjustment?

Answer and explanation

Correct answer: Rs 25,000

The governing concept is correction of an incorrect profit-sharing ratio. The total of both ratios is 6. Under the wrong ratio 3:2:1, B received 2/6 of Rs 1,50,000, or Rs 50,000. Under the correct ratio 2:3:1, B should receive 3/6 of Rs 1,50,000, or Rs 75,000. The adjustment due to B is therefore Rs 75,000 − Rs 50,000 = Rs 25,000. Option A is correct. Option B states the wrong share rather than the additional amount; option C states the correct total share, not the adjustment; option D ignores the difference between the two ratios.

Related tags

Profit-Sharing RatioPartner AdjustmentAppropriationProfit DistributionPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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