Question

A, B and C are partners sharing profits in 2:2:1 ratio admitted D for 1/8 share which he acquired entirely from A. Calculate new profit sharing ratio?

Answer 1

Old Ratio = A : B : C

                = 2 : 2 : 1

                = `2/5 : 2/5 : 1/5`

D admits for  `1/8` share in new firm, which he takes from A.

Here only A will sacrifice.

New Ratio = Old Ratio − Sacrificing Ratio

A = `2/5 - 1/8`

   = `[ 16 - 5]/40`

   = `11/40`

New Ratio = A : B : C : D

                 = `11/40 : 2/5 : 1/5 : 1/8` = `[ 11 : 16 : 8 : 5]/40`

                 = `11 : 16 : 8 : 5`