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A and B share profits in the ratio 6:4. C is admitted for a 1/5 share of the total profits. If the new mutual ratio of A and B is 7:1, what is B’s sacrifice ratio?

Answer and explanation

Correct answer: 3/10

After C receives 1/5 of the total profit, the remaining share for A and B is 4/5. Under their new mutual ratio of 7:1, B receives \((4/5)\times(1/8)=1/10\). B’s old share was 4/10, or 2/5. Therefore, B’s sacrifice = old share − new share = 2/5 − 1/10 = 3/10. Exam tip: First calculate the profit left for the old partners, then distribute that remainder according to their new mutual ratio.

Related tags

AccountancyAdmission Of PartnerNew Profit Sharing RatioSacrificing RatioReconstitution Admission Of A PartnerClass 12 Mcq

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