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Karan and Tarun share profits in the ratio 2:1. Varun is admitted as a partner for a 1/4 share of the total profits. Karan and Tarun sacrifice 1/6 and 1/12 of their shares, respectively. What will be the new profit-sharing ratio (Karan : Tarun : Varun)?

Answer and explanation

Correct answer: 2:1:1

Karan’s old share was 2/3, so his new share is 2/3 − 1/6 = 1/2. Tarun’s old share was 1/3, so his new share is 1/3 − 1/12 = 1/4. Varun receives 1/4. Therefore, the new ratio is 1/2 : 1/4 : 1/4 = 2:1:1. Exam tip: The incoming partner’s share must equal the total sacrifice made by the old partners; here, 1/6 + 1/12 = 1/4.

Related tags

Admission Of PartnerSacrifice RatioNew Profit Sharing RatioPartnership AccountingReconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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