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A and B share profits in the ratio 5:7. C is admitted for a \(\frac{1}{4}\) share of the total profit, contributed by A and B in the sacrificing ratio of 1:2. What will be B's new share?

Answer and explanation

Correct answer: \(\frac{5}{12}\)

A and B's old profit shares are \(\frac{5}{12}\) and \(\frac{7}{12}\), respectively. Out of C's \(\frac{1}{4}\) share, B sacrifices \(\frac{1}{4}\times\frac{2}{3}=\frac{1}{6}\), because the sacrificing ratio is 1:2. Therefore, B's new share is \(\frac{7}{12}-\frac{1}{6}=\frac{5}{12}\). Exam tip: subtract each partner's sacrifice from that partner's old share; do not subtract the entire incoming partner's share.

Related tags

New Profit Sharing RatioSacrificing RatioAdmission Of PartnerPartner's New ShareReconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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