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A and B share profits in the ratio 9:1. C is admitted for a 1/10 share of the total profits, which is sacrificed by A and B in the ratio 4:1. What will be the new profit-sharing ratio?

Answer and explanation

Correct answer: 41:4:5

C’s 1/10 share is sacrificed by A and B in the ratio 4:1. Thus, A’s sacrifice is 1/10 × 4/5 = 4/50, and B’s sacrifice is 1/10 × 1/5 = 1/50. Their old shares were 45/50 and 5/50, respectively. Therefore, the new shares are A = 41/50, B = 4/50, and C = 5/50, giving the new ratio 41:4:5. Exam tip: Subtract each existing partner’s sacrifice from their old share, then include the incoming partner’s share.

Related tags

AccountancyPartnershipReconstitutionAdmission Of PartnerNew Profit Sharing RatioSacrifice RatioReconstitution Admission Of A PartnerClass 12 Mcq

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