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Ishan and Dhruv share profits in the ratio 5:3. Nayan is admitted for a 1/8 share of profit. Nayan's entire share is acquired equally from Ishan and Dhruv, that is, 1/16 from each. What will be the new profit-sharing ratio?

Answer and explanation

Correct answer: Ishan : Dhruv : Nayan = 9:5:2

Since the old ratio is 5:3, Ishan's share is 5/8 and Dhruv's share is 3/8. Nayan receives 1/8 = 2/16. Therefore, Ishan's new share is 5/8 − 1/16 = 9/16, while Dhruv's new share is 3/8 − 1/16 = 5/16. Hence, the new ratio is 9/16 : 5/16 : 2/16 = 9:5:2. Option B merely scales up the old ratio and does not account for the shares sacrificed by Ishan and Dhruv. Exam tip: When the incoming partner acquires a share equally from existing partners, subtract the acquired portion from each of their old shares.

Related tags

Admission Of A PartnerNew Profit Sharing RatioPartnership AccountingClass 12 AccountancyReconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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