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A, B and C share profits in the ratio 3:5:2. A new partner, D, is admitted for a 1/10 share of profit, which is contributed entirely by B. What will be the new mutual profit-sharing ratio of the old partners?

Answer and explanation

Correct answer: 3:4:2

The old ratio 3:5:2 represents shares of 3/10, 5/10 and 2/10 for A, B and C respectively. Since D’s 1/10 share is taken entirely from B, B’s new share becomes 5/10 − 1/10 = 4/10. A’s and C’s shares remain unchanged. Therefore, the new mutual ratio of the old partners is 3:4:2. Option B is incorrect because it ignores B’s sacrifice. Exam tip: when the incoming partner’s share is taken solely from one old partner, subtract the entire incoming share from that partner’s original share.

Related tags

Admission Of PartnerNew Profit Sharing RatioMutual RatioSacrifice RatioAccountancy Class 12Reconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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