A and B share profits in the ratio of 3:2. C was admitted as a partner who gets 1/5 share. New profit sharing ratio, if C acquires 3/20 from A and 1/20 from B, would be:
Answer & explanation
Correct answer: option 1
The correct answer is option 1- 9:7:4.
A and B old ratio = 3:2
C admits = 1/5 share
C acquires 3/20 from A and 1/20 from B
So, sacrificing ratio = 3/20 : 1/20
= 3:1
New share = Old share - Sacrificed share
New share of A = 3/5 - 3/20
= (12-3)/20
= 9/20
New share of B = 2/5 - 1/20
= (8-1)/20
= 7/20
New ratio = 9/20 : 7/20 : 1/5
= 9/20 : 7/20 : 4/20
= 9:7:4