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A and B share profits in the ratio 6:5. C receives a 2/11 share, and A and B share the balance in the ratio 4:3. Does B gain or sacrifice, and by how much?

Answer and explanation

Correct answer: Sacrifice 8/77

The governing concept is comparison of an existing partner’s old share with the new share after admission. B’s old share in the ratio 6:5 was 5/11, which is 35/77. C receives 2/11, leaving 9/11 for A and B. Their new mutual ratio is 4:3, so B receives 3/7 of this balance: (9/11) × (3/7) = 27/77. B’s sacrifice is therefore old share minus new share, or 35/77 − 27/77 = 8/77. Since the new share is smaller, B sacrifices rather than gains. Hence option A is correct. Option B reverses the comparison, option C uses an incorrect difference, and option D ignores the change in the ratio.

Related tags

AdmissionSacrificeGainNew RatioPartnership AccountsNew Profit Sharing RatioReconstitution Admission Of A PartnerAccountancy

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