Question

Andrew and Stokes are partners in a firm sharing profits and losses in the ratio of 7:3. Andrew gives 1/7th
of his share, whereas Stokes gives 1/3rd of his share in favour of Gower, a new partner. calculate new profit sharing ratio​

Answer 1

Answer: New profit sharing ratio = 3 : 1 : 1

Step-by-step Explanation:

Old ratio of Andrew and Stokes = 7 : 3 or 7/10 : 3/10

Andrew's sacrifice ratio = 7/10 × 1/7 = 7/70 or 1/10

Stokes' sacrifice ratio = 3/10 × 1/3 = 3/30 or 1/10

Sacrificing ratio of Andrew and Stokes = 1/10 : 1/10 or 1 : 1

Gower's share = Andrew's share + Stokes' share

= 1/10 + 1/10

= 2/10 or 1/5

Thus, Gower's share of profit will be 1/5th.

Finding out the new profit sharing ratio.

Andrew's new share = Old Ratio - Sacrifice Ratio

= 7/10 - 1/10

= 6/10

Stokes' new share = Old ratio - Sacrifice Ratio

= 3/10 - 1/10

= 2/10

Gower's new share = 2/10

So, new profit sharing ratio = 6/10 : 2/10 : 2/10 or 6 : 2 : 2 or 3 : 1 : 1.

Answer 2

NEW PROFIT SHARING RATIO= 3:1:1

SACRIFICING RATIOS

For Andrew

sacrificing ratio = 7/10 × 1/7

=1/10

For Stokes,

sacrificing ratio= 3/10 × 1/3

=1/10

NEW RATIO = OLD RATIO- SACRIFICING RATIO

Andrew, 7/10 - 1/10

=6/10

Stokes, 3/10 - 1/10

= 2/10

Gower, Andrew sacrifice + Stokes sacrifice

=1/10 + 1/10

=2/10

So new ratio is 6:2:2 or 3:1:1