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

Answer and explanation

Correct answer: 19:17:12

The old ratio 7:5 gives A a share of 7/12 and B a share of 5/12. C’s 1/4 share is surrendered by A and B in the ratio 3:1, so A sacrifices 3/16 and B sacrifices 1/16. Therefore, A’s new share is 7/12 − 3/16 = 19/48, B’s is 5/12 − 1/16 = 17/48, and C’s is 1/4 = 12/48. Hence, the new ratio is 19:17:12. Exam tip: subtract each partner’s sacrifice from the old share and express all resulting shares with a common denominator.

Related tags

Sacrifice RatioNew Profit Sharing RatioAdmission Of A PartnerPartnership AccountingReconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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