A and B are partners in a firm sharing profits and losses in the ratio of 2 : 3. C is admitted for 1/5 share in the profits of the firm. If C gets it wholly from A, the new profit sharing ratio after C's admission will be:
Answer & explanation
Correct answer: option 4
C' share = 1/5
C gets whole 1/5 by A
So, New Share of A = 2/5-1/5
=1/5
Share of B= 3/5
NEW PROFIT SHARING RATIO IS 1/5 : 3/5:1/5
= 1:3:1