A and B are partners in a firm sharing profits and losses in the ratio of 3:2. C is admitted for 1/4th share in profits of the firm. Calculate new profit sharing ratio of the partners
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Explanation:
Old Ratio :
A : B = 3 : 2
A = 3/5
B = 2/5
C is admitted for 1/4th share in profits of the firm
suppose,
whole profit of all Partners = 1
1 - 1/4 = 3/4
New Share :
• A = 3/4 × 3/5 = 9/20
New Share of A = 9/20
• B = 3/4 × 2/5 = 6/20
New Share of B = 6/20
• C = 1/4 1 × 5/4 × 5 = 5/20
New Share of C = 5/20
A : B : C = 9/20 : 6/20 : 5/20
= 9 : 6 : 5
Hence, new profit sharing ratio of the partners is 9:6:5
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