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Radha and Madhav share profits in the ratio 8 : 2. Sita is admitted as a new partner for a 1/5 share of profits, which is sacrificed by Radha and Madhav in their old ratio. What will be the new profit-sharing ratio?

Answer and explanation

Correct answer: 16 : 4 : 5

The old ratio 8 : 2 simplifies to 4 : 1. Sita’s 1/5 share is sacrificed in this old ratio, so Radha sacrifices 1/5 × 4/5 = 4/25 and Madhav sacrifices 1/5 × 1/5 = 1/25. Therefore, Radha’s new share is 4/5 − 4/25 = 16/25, Madhav’s is 1/5 − 1/25 = 4/25, and Sita’s share is 5/25. Hence, the new ratio is 16 : 4 : 5. Exam tip: When the new partner’s share is acquired from the old partners in their old ratio, divide that share according to the old ratio to calculate each partner’s sacrifice.

Related tags

Admission Of A PartnerNew Profit Sharing RatioSacrificing RatioPartnership AccountsClass 12 AccountancyReconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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