A and B are partners in a business sharing profits and losses in the ratio of 7:3 respectively. They admit C as a new partner. A sacrificed 1/7th share of his profit and B sacrificed 1/3rd of his share in favour of C. The new profit sharing ratio of A, B and C will be:
Answer & explanation
Correct answer: option 1
The correct answer is option 1- 3:1:1.
Old ratio = 7:3
C admits.
A sacrificed 1/7th share of his profit and B sacrificed 1/3rd of his share in favour of C.
Sacrifice of A = 1/7 x 7/10
= 1/10
Sacrifice of B = 1/3 x 3/10
= 1/10
New Share of A = 7/10 - 1/10
= 6/10 or 3/5
New Share of B = 3/10 - 1/10
= 2/10 or 1/5
Share of C = 1/10 + 1/10
= 2/10 or 1/5
NEW PROFIT SHARING RATIO = 3/5 : 1/5 : 1/5
= 3:1:1