Question

A and B are sharing profits and losses equally. With effect from 1st April, 2018, they agree to share profits in the ratio of 4 : 3. Calculate individual partner’s gain or sacrifice due to the change in ration.

Answer 1

Solution:

Old Ratio (A and B) = 1 : 1

New Ratio (A and B) = 4 : 3

Sacrificing Ratio (or Gaining)=Old Ratio - New Ratio

A's Share= $\frac{1}{2}-\frac{4}{7}$ = $\frac{7}{14}-\frac{8}{14}$ = $\frac{-1}{14}$ (Gain)

B's Share = $\frac{1}{2}-\frac{3}{7}$ =  $\frac{7}{14}-\frac{6}{14}$ = $\frac{1}{14}$ (Sacrifice)

∴ A's Gain = 1/14 and B's Sacrifice = 1/14