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Question

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

A
3:5:2
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B
4:4:24:4:2
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C
5:3:2
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D
6:2:2
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Solution

The correct option is A 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

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