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A and B share profits in the ratio 7:5. C is admitted as a partner for a 1/6 share of profits, and the remaining profit is shared in the old ratio. What will be the new profit-sharing ratio?

Answer and explanation

Correct answer: 35:25:12

C receives 1/6 of the profits, so 5/6 remains for A and B. This remainder is divided in the old ratio 7:5. Therefore, A's share is (5/6) × (7/12) = 35/72, and B's share is (5/6) × (5/12) = 25/72. C's share is 1/6 = 12/72. Hence, the new profit-sharing ratio is 35:25:12. Exam tip: When the incoming partner receives a specified share and the balance is divided in the old ratio, multiply each old partner's fraction by the remaining share.

Related tags

Admission Of PartnerNew Profit Sharing RatioRemaining ProfitOld RatioPartnership AccountingReconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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