A, B and C start a business. A invests ₹1,21,500 for 12 months, B invests ₹1,02,060 for 9 months and C invests ₹97,200, but withdrew ₹24,500 after 6 months. If the total profit earned at the end of the year is ₹1,69,797, find the difference between the profit share of A and the profit share of B.
- AOption (a)
₹26,524
- BOption (b)
₹26,763
- COption (c)
₹26,973
- DOption (d)
₹26,884
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Correct answer
₹26,973
Why this answer is correct
Shortcut Trick
Effective capital ratio (Investment × Time):
A : B : C = (1,21,500 × 12) : (1,02,060 × 9) : (97,200 × 6 + 72,700 × 6)
A : B : C = 14,58,000 : 9,18,540 : 10,19,400 = 24,300 : 15,309 : 16,990
Sum of ratio parts = 24,300 + 15,309 + 16,990 = 56,599 units
Total profit = ₹1,69,797 ⇒ 1 unit = ₹3
Difference (A − B) = (24,300 − 15,309) × 3 = 8,991 × 3 = ₹26,973.
∴ The correct answer is ₹26,973.
Alternate Method
Given:
Investment of A = ₹1,21,500 for 12 months
Investment of B = ₹1,02,060 for 9 months
Investment of C = ₹97,200 for 6 months and (₹97,200 − ₹24,500) = ₹72,700 for 6 months
Total Profit = ₹1,69,797
Formula: Profit Share Ratio = (Investment1 × Time1) : (Investment2 × Time2)
Calculations:
⇒ Equivalent Capital of A = 1,21,500 × 12 = 14,58,000
⇒ Equivalent Capital of B = 1,02,060 × 9 = 9,18,540
⇒ Equivalent Capital of C = (97,200 × 6) + (72,700 × 6) = 5,83,200 + 4,36,200 = 10,19,400
⇒ Ratio A : B : C = 14,58,000 : 9,18,540 : 10,19,400
⇒ Dividing by common factor 60: 24,300 : 15,309 : 16,990
⇒ Sum of ratios = 24,300 + 15,309 + 16,990 = 56,599
⇒ Total Profit = ₹1,69,797
⇒ Value of 1 unit = 1,69,797 ÷ 56,599 = ₹3
⇒ Difference between share of A and B = (24,300 − 15,309) units
⇒ Difference = 8,991 × 3 = ₹26,973
∴ The correct answer is ₹26,973.
Additional Information
Basic Partnership Law
Profit is always distributed in the ratio of the product of Capital (C) and Time (T), i.e., P1 : P2 = C1×T1 : C2×T2.
Effective Capital for Multiple Transactions
When a partner changes investment mid-term, effective capital = (C1×T1 + C2×T2 + ...), where T is the duration for each capital amount.
Calculating Unknown Shares
Individual Profit = (Individual Ratio Part ÷ Total Ratio Sum) × Total Profit.