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A and B share profits in the ratio 4 : 3. C is admitted as a new partner with a 1/7 share of profits. C’s share is acquired as 2/21 from A and 1/21 from B. What will be the new profit-sharing ratio?

Answer and explanation

Correct answer: A : B : C = 10 : 8 : 3

A’s old share is 4/7 = 12/21. After giving 2/21 to C, A’s new share is 12/21 − 2/21 = 10/21. B’s old share is 3/7 = 9/21; after giving 1/21, B retains 8/21. C receives 1/7 = 3/21. Therefore, the new ratio is 10/21 : 8/21 : 3/21 = 10 : 8 : 3. Exam tip: Convert all shares to a common denominator before subtracting the sacrificing portions.

Related tags

AccountancyPartner AdmissionNew Profit Sharing RatioSacrificing RatioPartnership AccountsReconstitution Admission Of A PartnerClass 12 Mcq

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