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A and B share profits in the ratio 9:6. C is admitted for a 1/5 share, which is sacrificed by A and B in their old ratio. What will be the simplified new profit-sharing ratio?

Answer and explanation

Correct answer: A : B : C = 12 : 8 : 5

After C receives 1/5, the combined share left for A and B is 4/5. Simplify the old ratio 9:6 to 3:2. Therefore, A’s new share is 4/5 × 3/5 = 12/25, and B’s new share is 4/5 × 2/5 = 8/25. C’s share is 1/5 = 5/25. Hence, the new ratio is 12:8:5. Option B incorrectly adds C’s share to the old ratio without reducing A’s and B’s shares. Exam tip: When the incoming partner’s share is sacrificed by the old partners in their old ratio, distribute the remaining share, 1 minus the incoming partner’s share, in that old ratio.

Related tags

Admission Of PartnerNew Profit Sharing RatioSacrificing RatioPartnership AccountingRatio SimplificationReconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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