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Find New Profit-sharing Ratio: - Accountancy

Sum

Find New Profit-sharing Ratio:
 A and B are partners sharing profits/losses in the ratio of 3 : 2 . C is admitted for 1/4th share. A and B decide to share equally in future.

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Solution

Old Ratio = A : B = 3 : 2.

C admits for `1/4` share of profit
Let the combined share of all partners after C’s admission be = 1
Combined share of A and B after C’s admission = 1 - C's share
= 1 - `1/4  = 3/4`

New Ratio of A and B each = Combined share of A and B x `1/2`
= `3/4 xx 1/2 = 3/8` each

New Profit Sharing Ratio = `3/8 : 3/8 : 1/4`

                                         = `[ 3 : 3 : 2]/8` 
                                         =   3 : 3 : 2

Concept: Retirement and Death of a Partner - Calculation of New Profit Sharing Ratio
  Is there an error in this question or solution?
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APPEARS IN

TS Grewal Class 12 Accountancy - Double Entry Book Keeping Volume 1
Chapter 5 Admission of a Partner
Exercise | Q 9.6 | Page 86
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