Partnership Problems

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Partnership Problems Tricks

Partnership is an association of two or more parties, they put money for business.

Division of Profit and Loss

Rule: When investment of all partners are for the same time, the loss or profit is distributed among partners in the ratio of investment.

Example Let P and Q invested Rs. a and b for one year in a business then share of profit and loss be, P's share of profit : Q's share profit = a : b

Rule: When investments are for different time period, then profit ratio is calculated as capital multiplied by length of investment.

Example P's share of profit : Q's share profit = a* t1 : b* t2

Example Three partners A, B and C invested Rs. 1000, Rs. 1200 and Rs. 1500 respectively in business for one year. How should they divide a profit of Rs. 1295 ?

Solution

 As investment period is same so, profit should be divided
 in ratio of capitals as, 10 : 12 : 15, also 10 + 12 + 15 = 37

A's share = 10/37 * 1295 = 350

B's Share = 12/37 * 1295 = 420

C'share = 15/37 * 1295 = 525

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