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The profit-sharing ratio of two old partners is 2:3. A new partner is admitted for a 1/5 share of the profits. If the new partner acquires this share from the old partners in their old ratio, what will be the sacrifice of the first old partner?

Answer and explanation

Correct answer: \(\frac{2}{25}\)

The new partner’s total share is \(\frac{1}{5}\), and it is sacrificed by the old partners in the ratio 2:3. The first partner’s share in the old ratio is \(\frac{2}{5}\). Therefore, his sacrifice is \(\frac{1}{5}\times\frac{2}{5}=\frac{2}{25}\). Option C represents the new partner’s total share, not the first partner’s sacrifice. Exam tip: When sacrifice is in the old ratio, calculate each partner’s sacrifice as the new partner’s share multiplied by that partner’s share in the old ratio.

Related tags

Admission Of A PartnerNew Profit Sharing RatioSacrifice RatioPartnership AccountingClass 12Reconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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