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A and B share profits in the ratio \(2:1\). C is admitted for a \(\frac{1}{4}\) share of the total profits. A and B will share the remaining profits in the ratio \(5:1\). What is B’s sacrificed share?

Answer and explanation

Correct answer: \(\frac{5}{24}\)

B’s old profit share was \(\frac{1}{3}\). After giving C \(\frac{1}{4}\), the remaining profit is \(\frac{3}{4}\). B’s new share is therefore \(\frac{3}{4}\times\frac{1}{6}=\frac{1}{8}\), since A and B divide the balance in the ratio \(5:1\). Thus, B’s sacrifice is \(\frac{1}{3}-\frac{1}{8}=\frac{5}{24}\). Remember: sacrifice = old share − new share; \(\frac{1}{8}\) is B’s new share, not the sacrificed share.

Related tags

Admission Of PartnerNew Profit Sharing RatioSacrificing RatioProfit SharingReconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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