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A and B share profits in the ratio 1:2. C is admitted to the firm for a 1/6 share. After admission, A’s new profit share is 1/4. What will be B’s new profit share?

Answer and explanation

Correct answer: \(\frac{7}{12}\)

The new profit shares of A, B and C must add up to 1. Therefore, B’s new share = \(1-\frac{1}{4}-\frac{1}{6}=\frac{12-3-2}{12}=\frac{7}{12}\). Hence, option A is correct. The old ratio of 1:2 is useful for checking consistency, but once A’s new share and C’s share are given, B’s share is the remaining portion of the total profit.

Related tags

AccountancyAdmission Of PartnerNew Profit Sharing RatioProfit Sharing RatioPartnership AccountsReconstitution Admission Of A PartnerClass 12 Mcq

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