Question

A, B, C and D are partners. A and B share `3/4`th of profits in the ratio of 2 : 1 and C and D share the remaining profits equally. Profit sharing ratios will be ______.

Options

• 2 : 1 : 1 : 1

• 2 : 1 : 2 : 2

• 4 : 2 : 1 : 1

• 2 : 1 : 2 : 1

Answer 1

A, B, C and D are partners. A and B share `3/4`th of profits in the ratio of 2 : 1 and C and D share the remaining profits equally. Profit sharing ratios will be 4 : 2 : 1 : 1.

Explanation:

Calculate the shares of A and B:

A and B share `3/4`th of the total profits in the ratio of 2 : 1.

A’s share = `3/4 xx 2/3`

= `6/12`

= `1/2`

B’s share = `3/4 xx 1/3`

= `3/12`

= `1/4`

Calculate the shares of C and D:

Remaining profit = `1 - 3/4`

= `(4 - 3)/4`

= `1/4`

C and D share the remaining profit equally.

C’s share = `1/4 xx 1/2`

= `1/8`

D’s share = `1/4 xx 1/2`

= `1/8`

To express this as a ratio, find a common denominator, which is 8.

A’s share = `1/2 = 1/2 xx 4/4 = 4/8`

B’s share = `1/4 = 1/4 xx 2/2 = 2/8`

C’s share = `1/8`

D’s share = `1/8`

Now the ratio of A, B, C and D = `4/8 : 2/8 : 1/8 : 1/8`

Profit sharing ratio = 4 : 2 : 1 : 1