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The old profit-sharing ratio of three partners was 9:6:5. A new partner is admitted for a 1/10 share of the total profit, acquired equally from the first and second partners. What will be the new profit-sharing ratio after admission?

Answer and explanation

Correct answer: (8:5:5:2)

The total of the old ratio is 20, so the old shares are 9/20, 6/20 and 5/20. The new partner’s share is 1/10 = 2/20. Since it is acquired equally from the first and second partners, each of them sacrifices 1/20. The revised shares are therefore 8/20, 5/20, 5/20 and 2/20, giving the new ratio 8:5:5:2. Option B is incorrect because it adds the new partner without reducing the old partners’ shares. Exam tip: when the sacrifice is equal, divide the incoming partner’s share equally among the contributing partners before forming the ratio.

Related tags

Admission Of PartnerEqual SacrificeNew Profit Sharing RatioPartnership AccountingReconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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