Question

P and Q are the partners sharing profits and losses in the ratio of 4:3.Then admit R as partner for a 1/7th share in profits which he acquires equally from P and Q.Calculate new profit sharing ratio of the partner. ​

Answer 1

Answer:

The New Profit Sharing Ratio is 4: 5: 2

Explanation:

• The gains and losses incurred by the partnership are typically determined using the profit sharing ratio.
• The profit sharing ratio determines the subsequent entry in the business agreement and partner.
• P and Q are partners who split gains and losses in a 4:3 ratio.
• They accept R as a partner in exchange for a 1/7th portion of the profits, which he receives from P and Q equally.
• R therefore gains from P = 1/2*1/7=1/14
• R gains from Q when Q = 1/2*1/7=1/14
• An updated P = 4/14 share
• New Share of Q equals 3/7-1/14=5/14
• Updated R = 1/7 share
• The New Profit Sharing Ratio is thus equal to 4/14:5/14:1/7
• The New Profit Sharing Ratio is 4: 5: 2, as a result.

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