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A and B share profits in the ratio 3:5. C is admitted as a partner for a 1/4 share of the profits, and the remaining profit is divided between A and B in their old ratio. What will be the new profit-sharing ratio?

Answer and explanation

Correct answer: 9:15:8

C receives 1/4 of the total profit, leaving 3/4 for A and B. Dividing this remainder in the old ratio 3:5 gives A's share as (3/4) × (3/8) = 9/32 and B's share as (3/4) × (5/8) = 15/32. C's share is 1/4 = 8/32. Therefore, the new profit-sharing ratio is 9:15:8. Option B incorrectly keeps A and B's old ratio without adjusting it for the remaining profit. Exam tip: First find the profit left for the old partners, then distribute it in their old ratio.

Related tags

Admission Of PartnerNew Profit Sharing RatioRemaining ProfitPartnership AccountsReconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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