Question

A and B are partners sharing profits in the ratio of 5 : 3. C is admitted to the partnership for `1/4`th share of future profits. Calculate the new profit sharing ratio.

Answer 1

Let total profit be = 1.

Share given to C = `1/4`

Remaining Share = `1 - 1/4`

= `3/4`

Now the old partners will share this remaining profit in their old profit sharing ratios:

Hence,

A’s Share = `3/4 xx 5/8`

= `15/32`

B’s Share = `3/4 xx 3/8`

= `9/32`

C’s Share = `1/4`

= `(1 xx 8)/(4 xx 8)`

= `8/32`

The new profit-sharing ratio for A, B, and C is `15/32 : 9/32 : 8/32` or 15 : 9 : 8.