A and B began business with Rs. 3000 and Rs. 4000. After 8 months, A withdraws…
2025
A and B began business with Rs. 3000 and Rs. 4000. After 8 months, A withdraws Rs. 1000 and B advances Rs. 1000 more. At the end of the year, their profits amounted to Rs. 630. Find the share of A.
- A.
Rs. 240
- B.
Rs. 75
- C.
Rs. 125
- D.
Rs. 354
Show answer & explanation
Correct answer: A
In a partnership where a partner's capital changes during the year, profit is not shared in the simple ratio of the initial capitals -- it is shared in the ratio of each partner's equivalent (time-weighted) capital, found by multiplying the capital invested by the number of months it stayed invested, and summing this across every period of the year.
A invests Rs. 3000 for the first 8 months, then withdraws Rs. 1000, leaving Rs. 2000 invested for the remaining 4 months of the year.
A's equivalent capital = (3000 x 8) + (2000 x 4) = 24000 + 8000 = 32000.
B invests Rs. 4000 for the first 8 months, then advances Rs. 1000 more, taking the investment to Rs. 5000 for the remaining 4 months.
B's equivalent capital = (4000 x 8) + (5000 x 4) = 32000 + 20000 = 52000.
The profit-sharing ratio of A to B is 32000 : 52000, which simplifies to 8 : 13.
A's share of the total profit of Rs. 630 = 630 x 8 / (8 + 13) = 630 x 8 / 21 = Rs. 240.
Cross-check: B's share = 630 x 13 / 21 = Rs. 390, and Rs. 240 + Rs. 390 = Rs. 630, which equals the total profit -- confirming the split is correct.
Therefore, A's share of the profit is Rs. 240.