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A and B share profits in the old ratio of 8:7. C is admitted for a 1/5 share, which is sacrificed equally by A and B. What will be B’s share in the new profit-sharing ratio?

Answer and explanation

Correct answer: 11/30

Under the old ratio of 8:7, B’s old share is 7/(8+7) = 7/15. Since C’s 1/5 share is sacrificed equally, B’s sacrifice is 1/5 × 1/2 = 1/10. Therefore, B’s new share is 7/15 − 1/10 = 14/30 − 3/30 = 11/30. Option C is only B’s old share and does not deduct the sacrifice. Exam tip: When the incoming partner’s share is sacrificed equally, each old partner sacrifices half of that share.

Related tags

Equal SacrificeNew Partner AdmissionNew Profit Sharing RatioGoodwill AccountingReconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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