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A and B share profits in the ratio 6:5. C is admitted for a 1/11 share of profits, which is sacrificed by A and B in their old ratio. What will be the new profit-sharing ratio?

Answer and explanation

Correct answer: 60:50:11

C’s 1/11 share is sacrificed by A and B in their old ratio of 6:5. Thus, A’s sacrifice is 6/11 × 1/11 = 6/121 and B’s sacrifice is 5/11 × 1/11 = 5/121. A’s new share is 6/11 − 6/121 = 60/121, B’s new share is 5/11 − 5/121 = 50/121, and C’s share is 1/11 = 11/121. Therefore, the new ratio is 60:50:11. Exam tip: If the incoming partner’s share is sacrificed in the old ratio, distribute the sacrifice among the old partners in that same ratio.

Related tags

AccountancyAdmission Of A PartnerNew Profit Sharing RatioSacrifice RatioPartnershipReconstitution Admission Of A PartnerClass 12 Mcq

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