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A and B share profits in the ratio 7:3. C is admitted for a \(1/5\) share of the total profits, which is sacrificed by A and B in the ratio 1:4. What will be the new profit-sharing ratio?

Answer and explanation

Correct answer: 33:7:10

C receives \(1/5\) of the total profit, and A and B sacrifice it in the ratio 1:4. Thus, A sacrifices \(1/25\) and B sacrifices \(4/25\). A’s new share is \(7/10-1/25=33/50\), B’s new share is \(3/10-4/25=7/50\), and C’s share is \(1/5=10/50\). Therefore, the new ratio is \(33:7:10\). Option B incorrectly retains the old ratio without accounting for the sacrifice. Exam tip: Divide the incoming partner’s share according to the sacrificing ratio and subtract those amounts from the old shares.

Related tags

Sacrificing RatioNew Profit Sharing RatioAdmission Of PartnerPartnership AccountsReconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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