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Om and Prem share profits in the ratio 1:4. Khushi is admitted as a partner for a 1/5 share of the profits, which is sacrificed by Om and Prem in their old profit-sharing ratio. What will be the new profit-sharing ratio?

Answer and explanation

Correct answer: Om : Prem : Khushi = 4:16:5

Khushi’s 1/5 share is sacrificed by Om and Prem in their old ratio of 1:4. Thus, Om sacrifices 1/25 and Prem sacrifices 4/25. Om’s new share is 1/5 − 1/25 = 4/25, while Prem’s new share is 4/5 − 4/25 = 16/25. Khushi receives 1/5 = 5/25. Therefore, the new ratio is 4:16:5. Exam tip: Divide the incoming partner’s share in the old ratio and subtract each partner’s sacrifice from their old share.

Related tags

Admission Of A PartnerNew Profit Sharing RatioSacrificing RatioPartnership AccountsClass 12Reconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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