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Sonu and Monu share profits in the ratio 3:5. Dolly is admitted for a \(\frac{1}{8}\) share, which is contributed by both old partners in their old ratio. What will be Monu's new profit-sharing ratio?

Answer and explanation

Correct answer: \(\frac{35}{64}\)

After giving Dolly a \(\frac{1}{8}\) share, the old partners retain \(1-\frac{1}{8}=\frac{7}{8}\) of the profits. Monu's old share was \(\frac{5}{8}\), and he receives his proportionate share of the remaining profits. Therefore, his new share is \(\frac{5}{8}\times\frac{7}{8}=\frac{35}{64}\). The option \(\frac{5}{8}\) is Monu's old share, not his reduced share after admission. Exam tip: If the incoming partner's share is surrendered in the old ratio, multiply each old partner's share by the remaining share.

Related tags

Admission Of PartnerNew Profit Sharing RatioOld RatioSurrender Of ShareClass 12 AccountancyReconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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