| Read the following hypothetical text and answer the given questions: |
| ERD Ltd. is a partnership business with Ram and Shyam as partners engaged in the production and sales of readymade garments. |
| Their initial capital contribution was Rs.13.80,000 and Rs.10,20,000 respectively with profit sharing ratio of 3:2. Firm's goodwill was valued at Rs.10,00,000. Seeing the competition in the market they decided to expand their business. For this purpose, they Reeded machinery, more raw material etc. for which they needed more capital. Since they didn't have enough money and neither they wanted to take loan, they decided to admit Vijay as a partner who contributes Rs. 7,00,000" as capital and the required amount of goodwill for l/5th share of profits to be acquired equally from Ram and Shyam. |
| The partners decided that capital accounts of old partners are to be adjusted on the basis of the proportion of Vijay's Capital to his share in the business. |
| Vijay accepted the offer. The terms of the offer were duly accepted and Vijay was admitted as a partner. |
| Based on the above information you are required to answer the following questions: |
| What will be the new profit sharing ratio of Ram, Shyam and Vijay? |
A) 3:2:5
B) 5:3:2
C) 5:3:5
D) 3:2:1
Correct Answer: B
Solution :
[b] 5:3:2
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