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The profit-sharing ratio of A, B, C and D is 2:3:4:1. D retires, and A, B and C acquire his share equally. What will be the new profit-sharing ratio of A, B and C?

Answer and explanation

Correct answer: 7:10:13

D’s share is 1 out of the total 10 parts, that is, 1/10. Since this share is acquired equally by A, B and C, each receives 1/30. Their old shares are 2/10 = 6/30, 3/10 = 9/30 and 4/10 = 12/30. The new shares become 7/30, 10/30 and 13/30, giving the ratio 7:10:13. Exam tip: When a retiring partner’s share is acquired equally, add an equal increment to each continuing partner’s old share.

Related tags

Retirement Of PartnerNew RatioProfit Sharing RatioPartnership AccountsClass 12 AccountancyNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancy

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