Read the Case Study given below and answer the question.
Sterling Enterprises is a partnership business with Ryan, Williams and Sania as partners engaged in production and sales of electrical items and equipment. Their capital contributions were Rs.50,00,000, Rs.50,00,000 and Rs.80,00,000 respectively with the profit sharing ratio of 5:5:8. As they are now looking forward to expanding their business, it was decided that they would bring in sufficient cash to double their respective capitals. This was duly followed by Ryan and Williams but due to unavoidable reasons Sania could not do so and ultimately it was agreed that to bridge the shortfall in the required capital a new partner should be admitted who would bring in the amount that Sania could not bring and that the new partner would get share of profits equal to half of Sania’s share which would be sacrificed by Sania only. Consequent to this agreement Ejaz was admitted and he brought in the required capital and Rs.30,00,000 as premium for goodwill.

What will be the new profit-sharing ratio of Ryan, Williams, Sania and Ejaz?

5:5:4:4

The correct answer is option 3- 5:5:4:4.

Old ratio = 5:5:8 (Ryan, Williams and Sania)

New partner (Ejaz) would get share of profits equal to half of Sania’s share
Share of Sania in Old Partnership = 8/18

Share of Sania to be given to Ejaz = 1/2*8/18
                                                       = 4/18

Sania's new share = Old share - Sacrifice share
                              = 8/18 - 4/18
                              = 4/18

Ryan & Williams new share will be same as old share.

New ratio between Ryan, Williams, Sania & Ejaz = 5/18 : 5/18 : 4/18 : 4/18
                                                                             = 5:5:4:4