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A, B and C share profits in the ratio 7:2:1. When A retires, B and C acquire A’s share in the ratio 2:5. What will be the new profit-sharing ratio of B and C?

Answer and explanation

Correct answer: 2:3

A’s profit share is 7 parts. B and C acquire it in the ratio 2:5, so B receives \(7 \times \frac{2}{7}=2\) parts and C receives \(7 \times \frac{5}{7}=5\) parts. Thus, B’s new share is \(2+2=4\), and C’s new share is \(1+5=6\). The new ratio is \(4:6=2:3\). Exam tip: Add the acquired share to each partner’s old share and simplify the resulting ratio.

Related tags

Retirement Of PartnerNew Profit Sharing RatioGaining RatioPartnership AccountsNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancyClass 12 Mcq

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