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A and B share profits in the ratio 5:6. C is admitted for a 2/11 share of profits, which is sacrificed by A and B in the ratio A:B = 3:1. What will be the new profit-sharing ratio?

Answer and explanation

Correct answer: 7:11:4

A’s old share was 5/11 and B’s was 6/11. To provide C’s 2/11 share, A sacrifices 3/4 × 2/11 = 3/22 and B sacrifices 1/4 × 2/11 = 1/22. Thus, A’s new share is 5/11 − 3/22 = 7/22, B’s is 6/11 − 1/22 = 11/22, and C’s share is 2/11 = 4/22. Therefore, the new ratio is 7:11:4. Exam tip: Convert the old shares to a common denominator before subtracting the sacrificing shares.

Related tags

New Profit Sharing RatioSacrifice RatioAdmission Of PartnerPartnership AccountsReconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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