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A, B and C share profits in the ratio 2:3:5. D is admitted for a 1/10 share of profit, which is acquired entirely from C’s share. What will be the new profit-sharing ratio?

Answer and explanation

Correct answer: A : B : C : D = 2:3:4:1

The old ratio 2:3:5 has a total of 10 parts, so A, B and C hold 2/10, 3/10 and 5/10 respectively. D’s 1/10 share is taken entirely from C; therefore, C’s new share is 5/10 − 1/10 = 4/10. The new ratio is 2/10:3/10:4/10:1/10, or 2:3:4:1. Exam tip: When a new partner’s share is acquired entirely from one old partner, the shares of the other partners remain unchanged.

Related tags

Admission Of PartnerNew Profit Sharing RatioGaining PartnerAccountancy Class 12Partnership AccountingReconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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