Question

A and B are partners sharing profits and losses in the ratio of 2 : 5. They admit C on the condition that he will bring goodwill in cash which is distributed between A and B. C's share in future profits or losses is to be one-fourth. The new profit sharing ratio of A, B and C will be:

• A. 6:15:7
• B. 15:6:7
• C. 7:6:15
• D. 6:7:15

Answer 1

The correct option is A 6:15:7

Old profit sharing ratio A:B=$2$/$7$:$5$/$7$

New profit sharing ratio shall be calculated as follows:

C's ratio=$1$/$4$

The balance after C's share i.e shall be distributed amongst A & B.

The balance =$1/1$ -$1$/$4$=$3$/$4$

Therefore, A's share = $2$/$7$ (old share)of $3$/$4$=$6$/$28$

B's share= $5$/$7$ (old share) of $3$/$4$= $15$/$28$

C's share re-write to fir the equation=$1$/$4$ to be formed as $7$/$28$.

A:B:C New ratio=6:15:7