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A, B and C share profits in the ratio 4:4:2. D is admitted as a new partner for a 1/10 share of profits. D’s share is taken equally from A and C only. What is the new profit-sharing ratio?

Answer and explanation

Correct answer: Ratio of A, B, C and D: 7:8:3:2

The old shares are A = 4/10, B = 4/10 and C = 2/10. D’s 1/10 share is taken equally from A and C, so each gives up 1/20. The new shares are A = 4/10 − 1/20 = 7/20, B = 4/10 = 8/20, C = 2/10 − 1/20 = 3/20 and D = 1/10 = 2/20. Thus, the new ratio is 7:8:3:2.

Related tags

Admission Of A PartnerNew Profit-Sharing RatioPartnership AccountingNew Profit Sharing RatioReconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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