Question

A and B are partners sharing profits in the ratio of $3:2$. C is admitted into the firm for $1/5$th share in the profit which he acquires equally from A and B. The new profit sharing ratio will be ________.

• A. $3:5:2$
• B. 4:4:24:4:2
• C. $5:3:2$
• D. 6:2:2

Answer 1

Answer: (C)

$5:3:2$

Old ratio (A and B) = 3 : 2

C is admitted for 1/5 th share

A's sacrifice in favour of C = (1/5) * (1/2) = (1/10)

B's sacrifice in favour of C = (1/5) * (1/2) = (1/10)

New ratio = Old ratio - Sacrificing ratio

A's new ratio = (3/5) - (1/10) = 5/10 or 1/5

B's new share = (2/5) - (1/10) = 3/10

C's share = A's sacrifice + B's sacrifice

= (1/10) + (1/10)

= 2/10

Therefore, new profit sharing ratio of A, B and C is 5 : 3 : 2