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A and B share profits in the ratio 5 : 3. C is admitted for a \(\frac{1}{4}\) share of profits. A and B sacrifice their shares in the ratio 1 : 3, respectively. What will be the new profit-sharing ratio?

Answer and explanation

Correct answer: A : B : C = 9 : 3 : 4

C's \(\frac{1}{4}\) share is sacrificed by A and B in the ratio 1 : 3. Thus, A sacrifices \(\frac{1}{16}\) and B sacrifices \(\frac{3}{16}\). A's old share was \(\frac{5}{8}=\frac{10}{16}\), so the new share is \(\frac{9}{16}\). B's new share is \(\frac{3}{8}-\frac{3}{16}=\frac{3}{16}\), while C receives \(\frac{4}{16}\). Hence, the new ratio is 9 : 3 : 4. Option B fails to deduct the correct sacrifice from the old shares. Exam tip: The total reduction in the old partners' shares must equal the new partner's admitted share.

Related tags

AccountancyPartnershipAdmission Of PartnerNew Profit Sharing RatioSacrifice RatioClass 12Reconstitution Admission Of A PartnerClass 12 Mcq

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