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The old partners share profits in the ratio 13:7. C is admitted for a 1/4 share of profits. If both old partners sacrifice equally, what will be B's new profit-sharing share?

Answer and explanation

Correct answer: \(\frac{9}{40}\)

The total of the old ratio 13:7 is 20, so B's old share is \(\frac{7}{20}\). C receives a total share of \(\frac{1}{4}\). Since both old partners sacrifice equally, each partner's sacrifice is \(\frac{1}{4}\div2=\frac{1}{8}\). Therefore, B's new share is \(\frac{7}{20}-\frac{1}{8}=\frac{14}{40}-\frac{5}{40}=\frac{9}{40}\). As an exam tip, divide the incoming partner's share equally among the sacrificing partners before subtracting it from the old share.

Related tags

Equal SacrificeNew Profit Sharing RatioAdmission Of PartnerGoodwill AccountingPartnership AccountsReconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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