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The profit-sharing ratio of three old partners is 2:5:3. A new partner acquires a 1/10 share from the first partner and a 1/10 share from the second partner. What will be the new profit-sharing ratio after the admission of the new partner?

Answer and explanation

Correct answer: 1:4:3:2

The old partners hold 2/10, 5/10 and 3/10, respectively. The first partner's revised share is 2/10 − 1/10 = 1/10, while the second partner's revised share is 5/10 − 1/10 = 4/10. The third partner's share remains 3/10, and the new partner receives 1/10 + 1/10 = 2/10. Therefore, the new ratio is 1:4:3:2. Option B is incorrect because it does not deduct the transferred shares from the first two partners. Exam tip: When the incoming partner obtains shares from specified partners, deduct each specified portion from its respective source partner before forming the final ratio.

Related tags

New Profit Sharing RatioAdmission Of PartnerSpecific SacrificePartnership AccountsReconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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