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.
This question was previously asked in
Shift 16/06/2023 3:30 PM - 6:30 PM
Correct Answer
Detailed Explanation
To determine the new profit sharing ratio after admitting C as a new partner for a 25% share, you can calculate the remaining share for A and B:
A and B were sharing profits in a 4:1 ratio. A was sharing 80% (4/5) of the profit, and B was sharing 20% (1/5) of the profit.
Now, C acquires 25% of the profit share, leaving 75% (100% - 25%) for A and B.
So, A and B will continue sharing their remaining profit share in the same 4:1 ratio. To find their new profit sharing ratio, calculate their respective shares within the 75%:
- A's share = 75% * 4/5 = 60%
- B's share = 75% * 1/5 = 15%
The new profit sharing ratio for A, B, and C is 60:15:25, which simplifies to 12:3:5.
So, the correct answer is option 1: "11:4:5.
Get Dubuddy App
Practice on the go with our mobile app
More CUET Questions
The item that is not recorded in the Income and Expenditure account is:
On retirement of a partner, the retiring partner's capital account will be credited with:
Computerised Accounting System refers to:
The Journal entry for payment of unrecorded liability at the time of admission of partner is:
1. Unrecorded liability a/c Dr XXX
To Revaluation a/c XXX
2. Unrecorded liability a/c Dr XXX
To Cash XXX
3. Revaluation a/c Dr XXX
To Cash XXX
4. Liability a/c Dr XXX
To Revaluation a/c XXX
Test Series
CUET Subjects
Your CUET Journey Starts with DuBuddy
CUET ki Practice Means DuBuddy Pe Practice