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A and B share profits in the ratio 13:7. C is admitted as a new partner for a 1/4 share of the profits. A and B sacrifice C’s share equally. What will be the new profit-sharing ratio?

Answer and explanation

Correct answer: A : B : C = 21 : 9 : 10

A and B’s old shares are 13/20 and 7/20 because their ratio is 13:7. C receives 1/4 = 10/40 of the profits. Since A and B sacrifice this equally, each sacrifices 1/8 = 5/40. Thus, A’s new share is 26/40 − 5/40 = 21/40, B’s new share is 14/40 − 5/40 = 9/40, and C’s share is 10/40. Therefore, the new ratio is 21:9:10. Exam tip: When the new partner’s share is sacrificed equally, subtract half of that share from each old partner’s share.

Related tags

Admission Of PartnerNew Profit Sharing RatioEqual SacrificePartnership AccountingClass 12Reconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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