Question

A and B are partners sharing profits in the ratio of $1:2$. They admit C for $1/5$th share and decide to share future profits equally. The new profit sharing ratio will be _______.

• A. $2:2:1$
• B. $3:1:1$
• C. $1:3:1$
• D. None of these

Answer 1

The correct option is A $2:2:1$

Old ratio (A and B) = 1 : 2

C is admitted for 1/5 share of profit

Let the combined share of all partners after C's admission = 1

Combined share of A and B in the new firm = 1 - C's share

= 1 - (1/5)

= (4/5) * (1/2)

= 4/10 each

New ratio of A, B and C = 4/10, 4/10 and 1/5

= 4 : 4 : 2 or 2 : 2 : 1