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The first and second partners share profits in the ratio 5:2. A third partner is admitted for a \(\frac{1}{7}\) share of profits. If the first partner sacrifices \(\frac{1}{14}\) of the profit, what will be the second partner’s new profit-sharing share?

Answer and explanation

Correct answer: \(\frac{3}{14}\)

Under the old ratio 5:2, the second partner’s share was \(\frac{2}{7}\). The incoming partner receives a total share of \(\frac{1}{7}\). Since the first partner sacrifices \(\frac{1}{14}\), the second partner must sacrifice the remaining \(\frac{1}{14}\). Therefore, the second partner’s new share is \(\frac{2}{7}-\frac{1}{14}=\frac{4}{14}-\frac{1}{14}=\frac{3}{14}\). Exam tip: the incoming partner’s share must equal the total sacrifice made by the old partners.

Related tags

New Profit Sharing RatioAdmission Of PartnerSacrifice RatioPartnership AccountingReconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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