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A and B share profits in the old ratio 6:4. C is admitted for a 1/5 share of profit, and the remaining profit is shared in the old ratio. What will be A’s new profit-sharing share?

Answer and explanation

Correct answer: 12/25

After C receives 1/5 of the profit, the remaining profit is 1 − 1/5 = 4/5. A’s old share was 6/(6+4) = 3/5. Therefore, A’s new share is \(\frac{4}{5}\times\frac{3}{5}=\frac{12}{25}\). Option B is only A’s old share and does not account for the reduction due to C’s admission. Exam tip: When the remaining profit is shared in the old ratio, each old partner’s new share equals the remaining profit multiplied by that partner’s old fraction.

Related tags

New Profit Sharing RatioAdmission Of PartnerRemaining ProfitOld RatioAccountancyReconstitution Admission Of A PartnerClass 12 Mcq

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