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A and B share profits in the ratio 12:8. C is admitted for a 1/4 share of the profits, which is surrendered by A and B in their old ratio. What is the simplified new profit-sharing ratio of A, B and C?

Answer and explanation

Correct answer: A : B : C = 9 : 6 : 5

A and B's old ratio, 12:8, simplifies to 3:2. After C receives 1/4 of the profits, 3/4 remains for A and B. Their new shares are therefore (3/4 × 3/5) = 9/20 for A and (3/4 × 2/5) = 6/20 for B; C's share is 1/4 = 5/20. The ratio 9:6:5 follows.

Related tags

Admission Of PartnerNew Profit-Sharing RatioAccountancyClass 12New Profit Sharing RatioReconstitution Admission Of A PartnerClass 12 Mcq

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