Question

A , B and C are equal partners. They admit D and E as new partners in the firm. A gives 1/8th from his share to D and C gives 1/3rd of his share to E. Calculate the new profit sharing ratio

Answer 1

Answer:

Correct option is

D

19:19:12:10

Old ratio (A and B) 1 : 1

C admits for 1/5th share

D admits for 1/6th share

Let the combined share of all the partners after C's and D's admission = 1

Combined share of A and B in the new firm = 1 - (1/5) - (1/6)

                                                                             19/30

New ratio = Old ratio * Combined share of A and B

A's new ratio = (1/2) * (19/30) = 19/60

B's new ratio = (1/2) * (19/30) = 19/60

C's share = 1/5 or 12/60

D's share = 1/6 or 10/60

New profit sharing ratio of A : B : C : D =  19 : 19 : 12 : 10

Explanation:

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