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A and B share profits in the ratio 5:4. C receives a 1/3 share. A gives 1/5 of his old share to C, and the balance of C’s share is taken from B. What will be the new ratio?

Answer and explanation

Correct answer: A:B:C = 4:2:3

The governing concept is construction of the new ratio from the precise sacrifices made by the old partners. A’s old share is 5/9. He gives one-fifth of this old share to C, so A sacrifices (5/9) × (1/5) = 1/9. C’s total share is 1/3 = 3/9; therefore B contributes the remaining 2/9. A’s new share is 5/9 − 1/9 = 4/9, while B’s new share is 4/9 − 2/9 = 2/9. C receives 3/9. Multiplying all shares by 9 gives A:B:C = 4:2:3. Thus option A is correct. The other options fail to preserve the stated contributions to C.

Related tags

New Profit Sharing RatioSacrificeAdmissionPartnership AccountsReconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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