A & B are sharing profits in ratio of 3:2 and admit C as a new partner with 1/5th share of profits. They have capital of ₹4,00,000 each. A & B sacrifice in which ratio?

Old Profit sharing ratio (3:2)

The correct answer is option 2- Old Profit sharing ratio (3:2).

C’s share = 1/5
Let total share = 1
Remaining share = 1-1/5
                           = 4/5

A’s new share = 3/5 x 4/5
                       = 12/25
B’s new share = 2/5 of 4/5
                       = 8/25

New profit sharing ratio of A, B and C will be 12/25:8/25:1/5 or 12:8:5.

Note: It has been assumed that the new partner acquired his share from old partners in old ratio.

Sacrifice of A = 3/5 - 12/25
                     = (15-12)/25
                     = 3/25

Sacrifice of B = 2/5 - 8/25
                     = (10-8)/25
                     = 2/25

Thus, sacrificing ratio = 3/25 :2/25 or 3:2.