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

Answer and explanation

Correct answer: 9:11

The relevant concept is redistribution of the retiring partner’s share equally among the continuing partners. The original total is 1+7+2=10, so A’s share is 1/10, B’s is 7/10 and C’s is 2/10. A and C each acquire half of B’s share, namely 7/20. A’s new share becomes 1/10+7/20=2/20+7/20=9/20. C’s new share becomes 2/10+7/20=4/20+7/20=11/20. Hence their new ratio is 9:11, so option A is correct. Option B is only the old A:C ratio; options C and D do not reflect the equal addition of 7/20 to both partners.

Related tags

RetirementNew RatioEqual AcquisitionAccountancy Class 12New RatiosReconstitution Retirement Or Death Of A PartnerAccountancyClass 12 Mcq

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