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A, B and C share profits in the old ratio 1:4:5. C retires, and the new profit-sharing ratio between A and B becomes 3:7. What is B’s gain?

Answer and explanation

Correct answer: \(\frac{3}{10}\)

B’s old share was \(\frac{4}{10}\), since the total of the old ratio is \(1+4+5=10\). In the new ratio 3:7, B’s new share is \(\frac{7}{10}\). Therefore, B’s gain = new share − old share = \(\frac{7}{10}-\frac{4}{10}=\frac{3}{10}\). Option D is only B’s old share, not the gain. Exam tip: always calculate gain as the new share minus the old share.

Related tags

Partner RetirementGain RatioNew Profit Sharing RatioAccountancy Class 12Ratio CalculationNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancy

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