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Question

A and B are partners sharing profits in the ratio of 4:1. C is admitted for 1/4th share in profits which he acquires wholly from A. The new profit sharing ratio will be _________.

A
4:11:5
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B
10:5:5
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C
8:7:5
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D
11:4:5
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Solution

The correct option is C 11:4:5
Old share (A and B) = 4 : 1
C is admitted for 1/4 Share
A sacrifices in favour of C = 1/4
New ratio = Old ratio - Sacrificing ratio
A's new ratio = (4/5) - (1/4) = 11/20
B's new share = (1/5) - 0 = 1/5 or 4/20
C's share = 1/4 or 5/20
Therefore, new profit sharing ratio of A, B and C = 11 : 4 : 5

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