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The profit-sharing ratio of two old partners is 4:3. A new partner acquires 1/7 of the share from the first partner and 2/7 from the second partner. What will be the new profit-sharing ratio?

Answer and explanation

Correct answer: (3:1:3)

Since the old ratio 4:3 has a total of 7 parts, the old partners’ shares are 4/7 and 3/7. The first partner’s new share is 4/7 − 1/7 = 3/7, while the second partner’s new share is 3/7 − 2/7 = 1/7. The new partner receives 1/7 + 2/7 = 3/7. Therefore, the new ratio is 3/7:1/7:3/7 = 3:1:3. Exam tip: subtract the share given by each old partner from that partner’s original share.

Related tags

New Profit Sharing RatioAdmission Of PartnerSacrifice By PartnersReconstitution Of PartnershipReconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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