Question

X, Y and Z were in partnership sharing profits in the ratio of 4 : 3 : 1. The partners agreed to share future profits in the ratio 5 : 4 : 3. Each partner's gain or sacrifice due to change in ratio will be:

Options

• `X  "Sacrifice"  2/24; Y  "Sacrifice"  1/24; Z  "Gain"  3/24`

• `X  "Gain"  2/24; Y  "Gain"  1/24; Z  "Sacrifice"  3/24`

• `X  "Sacrifice"  1/24; Y  "Sacrifice"  2/24; Z  "Gain"  3/24`

• `X  "Sacrifice"  2/24; Y  "Gain"  3/24; Z  "Sacrifice"  3/24`

Answer 1

`bb(X  "Sacrifice"  2/24; Y  "Sacrifice"  1/24; Z  "Gain"  3/24)`

Explanation:

Old ratio = 4 : 3 : 1

Total = 4 + 3 + 1 = 8

So the old shares are:

`X = 4/8 = 1/2 = 12/24`

`Y = 3/8 = 9/24`

`Z = 1/8 = 3/24`

New ratio = 5 : 4 : 3

Total = 5 + 4 + 3 = 12

So the new shares are:

`X = 5/12 = 10/24`

`Y = 4/12 = 8/24`

`Z = 3/12 = 6/24`

Now compare old and new shares:

Partner	Old	New	Gain/Sacrifice
X	`12/24`	`10/24`	Sacrifice `2/24`
Y	`9/24`	`8/24`	Sacrifice `1/24`
Z	`3/24`	`6/24`	Gain `3/24`