Question

A and B were in partnership sharing profits equally. With effect from 1st April, 2023 they agreed to share profits in the ratio of 4 : 3. Calculate the individual partner's gain or sacrifice due to change in ratio.

Answer 1

Old Ratio (A and B) = 1 : 1

New Ratio (A and B) = 4 : 3

Sacrificing (or Gaining) Ratio = Old Ratio − New Ratio

A's share = `1/2 - 4/7 = (7-8)/14 = (-1)/14` (Gain)

B's share = `1/2 - 3/7 = (7-6)/14 = 1/14` (sacrifice)

∴ A’s Gain = `1/14`

B’s Sacrifice = `1/14`