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A and B share profits in the ratio 5:6. C is admitted for a \(\frac{2}{11}\) share of profits, and B’s new share is \(\frac{1}{2}\). What is B’s gain or sacrifice?

Answer and explanation

Correct answer: Sacrifice \(\frac{1}{22}\)

B’s old profit share was \(\frac{6}{11}=\frac{12}{22}\), whereas his new share is \(\frac{1}{2}=\frac{11}{22}\). Since the new share is smaller by \(\frac{1}{22}\), B sacrifices \(\frac{1}{22}\). Use the rule \(\text{Sacrifice} = \text{Old Share} - \text{New Share}\); if the new share is larger, it represents a gain.

Related tags

Admission Of PartnerGain And SacrificeNew Profit Sharing RatioPartnership AccountsClass 12Reconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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