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A, B, and C are partners sharing profits in the ratio 3:1:6. C retires, and the new profit-sharing ratio of A and B becomes 2:1. What is A’s gain in share?

Answer and explanation

Correct answer: 11/30

A’s old share was 3/(3+1+6) = 3/10. After C’s retirement, A’s new share is 2/(2+1) = 2/3. Therefore, A’s gain = new share − old share = 2/3 − 3/10 = 20/30 − 9/30 = 11/30. Thus, 2/3 is A’s new share, not the gain. Exam tip: calculate a partner’s gain as new share minus old share.

Related tags

Gain CalculationRetirement Of PartnerNew RatioProfit Sharing RatioPartnership AccountingNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancy

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