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Question
Mala and Anitha are partners, sharing profits and losses in the ratio of 3 : 2. Mercy is admitted into the partnership with 1/5 share in the profits. Calculate new profit sharing ratio and sacrificing ratio.
Solution
Calculate New Profit Sharing Ratio = `1 - 1/5 = 4/5`
Mala = `3/5 xx 4/5 = 12/25`
Anitha = `2/5 xx 4/5 = 8/25`
Mercy = `1/5 xx 5 = 5/25`
New Profit Sharing Ratio = 12 : 8 : 5
Sacrificing Ratio = Old share – New share
Mala = `3/5 - 12/25 = (15 - 12)/25 = 3/25`
Anitha = `2/5 - 8/25 = 2/25`
Sacrificing Ratio = 3 : 2
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RELATED QUESTIONS
If the old profit sharing ratio is more than the new profit sharing ratio of a partner, the difference is called ____________.
Match List I with List II and select the correct answer using the codes given below:
| List I | List II |
| (i) Sacrificing ratio | 1. Investment fluctuation fund |
| (ii) Old profit sharing ratio | 2. Accumulated profit |
| (iii) Revaluation Account | 3. Goodwill |
| (iv) Capital Account | 4. Unrecorded liability |
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