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Sonu and Monu share profits in the ratio of 7:1. Dolly is admitted for a 1/8 share, which is taken entirely from Monu’s share. What will be the new profit-sharing ratio after Dolly’s admission?

Answer and explanation

Correct answer: Sonu : Monu : Dolly = 7:0:1

Sonu’s old share is 7/8 and Monu’s old share is 1/8. Dolly’s entire 1/8 share is taken from Monu, so Monu’s new share is 1/8 − 1/8 = 0. Sonu retains 7/8 and Dolly receives 1/8. Therefore, the new ratio is 7/8 : 0 : 1/8 = 7:0:1. Exam tip: If an incoming partner takes an old partner’s entire share, that old partner’s new share becomes zero.

Related tags

Admission Of A PartnerNew Profit-Sharing RatioProfit-Sharing RatioAccountancyClass 12New Profit Sharing RatioReconstitution Admission Of A PartnerClass 12 Mcq

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