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A, B and C share profits in 5:5:2. B retires and A and C's new ratio is 3:2. What is A's gain?

Answer and explanation

Correct answer: 11/60

The governing rule for a continuing partner’s gain is new share minus old share. The old ratio totals 5+5+2=12, so A’s old share is 5/12. After B retires, the new ratio A:C is 3:2, giving A a new share of 3/5. Use a common denominator of 60: 3/5=36/60 and 5/12=25/60. Therefore A’s gain is 36/60−25/60=11/60, making option A correct. Option C is only A’s old share, option B is not A’s new share because A receives 3/5, and option D results from an incorrect subtraction. As a check, C’s gain is 2/5−2/12=7/30, and the two gains together equal B’s old share of 5/12.

Related tags

Gaining RatioRetirementFraction CalculationGoodwill SettlementAccountancy Class 12Reconstitution Retirement Or Death Of A PartnerAccountancyClass 12 Mcq

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