A and B are partners in a firm sharing profit in 4 : 1 ratio. They admitted "C" as a new partner for 25% share in the profit, which he acquired wholly from A. Determine the new profit sharing ratio.
Answer & explanation
Correct answer: option 1
The correct answer is option 1- 11 : 4 : 5.
Old ratio = 4:1
C admits with 25% share i.e. 1/4
A sacrifice = 1/4
A's new share = 4/5 - 1/4
= (16-5)/20
= 11/20
B's new share = old share = 1/5
C's new share = 1/4
New ratio = 11/20 : 1/5 :1/4
= 11/20 : 4/20 : 5/20
= 11:4:5