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A, B, C and D share profits and losses in the ratio 5:2:4:1. If B retires, what is the old mutual ratio of the remaining partners A, C and D?

Answer and explanation

Correct answer: 5:4:1

Since B is the retiring partner, B’s share of 2 is omitted. The original shares of the continuing partners A, C and D are 5, 4 and 1 respectively, so their old mutual ratio is 5:4:1. Option B is incorrect because it still includes the retiring partner B. Exam tip: For the old mutual ratio, retain only the original proportional shares of the continuing partners; there is no need to convert them into a new total of 1.

Related tags

Partnership AccountsPartner RetirementOld Mutual RatioReconstitution Of PartnershipProfit Sharing RatioNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancy

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