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If old partners share profits in the ratio 9:7:4 and the new partner takes a 1/5 share only from the first partner, what is the new ratio?

Answer and explanation

Correct answer: 5:7:4:4

The governing concept is sole sacrifice: when the incoming partner obtains the entire share from one old partner, only that partner’s share decreases. The old ratio 9:7:4 totals 20, so the original shares are 9/20, 7/20 and 4/20. The first partner gives 1/5, which equals 4/20, to the incoming partner. Consequently, the first partner retains 9/20 − 4/20 = 5/20. The second and third partners make no sacrifice and retain 7/20 and 4/20. The new partner receives 1/5 = 4/20. Therefore, the complete new ratio is 5/20:7/20:4/20:4/20, which reduces to 5:7:4:4. Option A is correct. Option B fails to reduce the first partner’s share, while C and D change partners who were not stated to sacrifice.

Related tags

Sole SacrificeFirst PartnerNew RatioNew Profit Sharing RatioReconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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