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A and B share profits in the ratio 3:4. C is admitted for a \(2/7\) share of the total profits, and the sacrificing ratio of A and B is 2:3. What will be the new profit-sharing ratio?

Answer and explanation

Correct answer: 11:14:10

A and B initially have shares \(3/7=15/35\) and \(4/7=20/35\), respectively. C receives \(2/7=10/35\). Since the sacrificing ratio is 2:3, A sacrifices \(4/35\) and B sacrifices \(6/35\). Thus, their new shares are \(11/35\) and \(14/35\), while C receives \(10/35\). Therefore, the new profit-sharing ratio is 11:14:10. Option B does not adjust the old partners’ shares for their sacrifice. Exam tip: subtract each partner’s sacrifice from the old share and then include the incoming partner’s share.

Related tags

New Profit Sharing RatioSacrificing RatioAdmission Of PartnerReconstitution Of PartnershipReconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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