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Two old partners share profits in the ratio 4:1. A new partner is given \(\frac{1}{5}\) of the total profit, and the first old partner's new share is \(\frac{3}{5}\). What will be the second old partner's new profit-sharing share?

Answer and explanation

Correct answer: \(\frac{1}{5}\)

After admission, the new shares of all partners must add up to 1. Therefore, the second old partner's share is \(1-\frac{3}{5}-\frac{1}{5}=\frac{1}{5}\). Choosing \(\frac{2}{5}\) would make the total exceed 1, so it is incorrect. Exam tip: For a missing-share question, subtract the sum of all given shares from 1.

Related tags

New Profit Sharing RatioAdmission Of PartnerMissing ShareProfit Sharing RatioReconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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