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A and B share profits in the ratio 12:5. C is admitted and receives a 2/17 share transferred entirely from A. What will be the new profit-sharing ratio?

Answer and explanation

Correct answer: 10:5:2

The old ratio 12:5 has a total of 17 parts, so A's share is 12/17 and B's share is 5/17. Since C receives 2/17 entirely from A, A's new share becomes 12/17 − 2/17 = 10/17. B's share remains 5/17, while C gets 2/17. Therefore, the new ratio is 10:5:2. Exam tip: If the new partner receives a share from only one existing partner, reduce the share of only that partner.

Related tags

Admission Of PartnerNew Profit Sharing RatioSacrifice RatioPartnership AccountingReconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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