Shortcut Trick
Percentage of profit remaining for distribution after X's fee = 100% − 15% = 85%
Remaining Divisible Profit = 85% of 4,00,000 = 3,40,000
Investment ratio of X : Y : Z = 2 : 3 : 5 (Total = 10 parts)
Y's share = (3 ÷ 10) × 3,40,000
Y's share = 1,02,000
∴ The correct answer is Rs. 1,02,000.
Alternate Method
Given:
Total profit at the end of the year = Rs. 4,00,000
Ratio of investments X : Y : Z = 2 : 3 : 5
X's management fee = 15% of the total annual profit
Total Profit: 4,00,000
X's 15% Fee: 60,000
Divisible: 3,40,000
X (2 parts)
68,000
Y (3 parts)
1,02,000
Z (5 parts)
1,70,000
Calculations:
⇒ Management fee of X = (15 ÷ 100) × 4,00,000 = Rs. 60,000
⇒ Divisible profit to be distributed = Total Profit − Management Fee
⇒ Divisible profit = 4,00,000 − 60,000 = Rs. 3,40,000
⇒ Total ratio parts = 2 + 3 + 5 = 10 parts
⇒ Y's share in the divisible profit = (3 ÷ 10) × 3,40,000
⇒ Y's share = 3 × 34,000 = Rs. 1,02,000
∴ The correct answer is Rs. 1,02,000.
Additional Information
Active vs Sleeping Partner
A partner who manages the business operations is an active partner and typically receives a fixed salary or a certain percentage of profit as a management fee before the rest of the profit is shared among all partners.
Partnership Profit Distribution Formula
When partners invest different amounts for specific time periods, the divisible profit is distributed in the ratio of the product of their respective capital and time: Ratio = (C1 × T1) : (C2 × T2) : (C3 × T3).
Divisible Profit Concept
Total gross profit is first reduced by common expenses, taxes, and any individual partner's remuneration. The remaining balance (Divisible Profit) is allocated to all partners based on their effective investment ratio.