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A and B share profits in the ratio 11:9. C is admitted for a 1/5 share of the profits. C’s share is acquired as 3/20 from A and 1/20 from B. What will be the new profit-sharing ratio?

Answer and explanation

Correct answer: A : B : C = 8 : 8 : 4

Since A and B share profits in the ratio 11:9, their old shares are 11/20 and 9/20, respectively. A’s new share is 11/20 − 3/20 = 8/20, and B’s new share is 9/20 − 1/20 = 8/20. C’s share is 1/5 = 4/20. Therefore, the new ratio is 8/20 : 8/20 : 4/20 = 8:8:4. Option B is incorrect because it adds C’s share without reducing A’s and B’s shares. Exam tip: subtract the portion surrendered by each old partner from that partner’s original share.

Related tags

AccountancyPartner AdmissionNew Profit Sharing RatioSacrificing SharePartnership ReconstitutionReconstitution Admission Of A PartnerClass 12 Mcq

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