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A and B share profits in the ratio 3:4. C is admitted for a 1/7 share of the total profits, which is taken from A and B in the ratio 1:2. What will be A’s new profit-sharing ratio?

Answer and explanation

Correct answer: 8/21

A’s old share is 3/(3+4) = 3/7. Since C’s 1/7 share is taken from A and B in the ratio 1:2, A’s sacrifice is 1/7 × 1/3 = 1/21. Therefore, A’s new share is 3/7 − 1/21 = 9/21 − 1/21 = 8/21. Exam tip: A partner’s new share equals the old share minus the share sacrificed. Option B is only A’s old share and ignores the sacrifice.

Related tags

New Profit Sharing RatioSacrificing RatioAdmission Of PartnerPartnership AccountingReconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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