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A and B share profits in the ratio 5:4. C is admitted with a 1/9 share of profit taken entirely from A’s share. What will be the new profit-sharing ratio?

Answer and explanation

Correct answer: 4:4:1

A’s and B’s old shares are 5/9 and 4/9, respectively. Since C’s 1/9 share is taken entirely from A, A’s new share becomes 5/9 − 1/9 = 4/9. B continues to have 4/9, while C receives 1/9. Therefore, the new ratio is 4/9 : 4/9 : 1/9 = 4:4:1. Option B is incorrect because it does not deduct C’s share from A. Exam tip: Reduce the share only of the partner from whom the new partner’s share is taken.

Related tags

Admission Of A PartnerNew Profit Sharing RatioSacrifice By One PartnerPartnership AccountingReconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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