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X and Y share profits and losses in the ratio of 4:3. They admit Z in the firm with 3/7 share which he gets 2/7 from X and 1/7 form Y. The new profit sharing ratio will be:
  • a)
    7:3:3
  • b)
    2:2:3
  • c)
    5:2:3
  • d)
    2:3:3
Correct answer is option 'B'. Can you explain this answer?
Most Upvoted Answer
X and Y share profits and losses in the ratio of 4:3. They admit Z in ...
Old ratio (X and Y) = 4 : 3
Z admit for 3/7 share of profit
X sacrifice in favour of Z = 2/7
Y sacrifice in favour of Z = 1/7
New ratio = Old ratio - sacrificing ratiio
X's new ratio = (4/7) - (2/7) = 2/7
Y's new ratio = (3/7) - (1/7) = 2/7
C's share = 3/7
Therefore, new profit sharing ratio of X, Y and Z is 2 : 2 : 3
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Community Answer
X and Y share profits and losses in the ratio of 4:3. They admit Z in ...
Calculation of New Profit Sharing Ratio:
1. Initial Profit Sharing Ratio:
X and Y share profits and losses in the ratio of 4:3.
2. Sharing of Z's share:
Z is admitted in the firm with a 3/7 share, getting 2/7 from X and 1/7 from Y.
3. Calculation:
- Let the initial profits for X and Y be 4x and 3x respectively.
- Z gets 2/7 of X's share, which is (2/7) * 4x = 8x/7.
- Z gets 1/7 of Y's share, which is (1/7) * 3x = 3x/7.
- Therefore, Z's share = 8x/7 + 3x/7 = 11x/7.
4. New Profit Sharing Ratio:
- After Z's admission, the new profit sharing ratio will be:
X : Y : Z = 4x - 8x/7 : 3x - 3x/7 : 11x/7
= (28x - 8x) : (21x - 3x) : 11x
= 20x : 18x : 77x
= 20 : 18 : 77
= 2 : 2 : 9
Therefore, the new profit sharing ratio will be 2:2:9, which corresponds to option 'B'.
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