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A and B share profits in the ratio \(9:1\). C is admitted for a \(1/10\) share of the profits, which is sacrificed by A and B in the ratio \(4:1\). What will be B’s new share of profit?

Answer and explanation

Correct answer: \(2/25\)

B’s old share was \(1/10\). Since C’s \(1/10\) share is sacrificed by A and B in the ratio \(4:1\), B sacrifices \(1/5\) of it, i.e. \(1/10 \times 1/5 = 1/50\). Therefore, B’s new share is \(1/10 - 1/50 = 5/50 - 1/50 = 4/50 = 2/25\). Exam tip: Divide the incoming partner’s share according to the sacrificing ratio before subtracting each partner’s sacrifice from the old share.

Related tags

New Profit Sharing RatioSacrificing RatioAdmission Of PartnerPartnership AccountingClass 12Reconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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