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A, B and C share profits in the ratio 2:3:4. When A retires, B and C acquire A’s share in the ratio 5:4. What will be the new profit-sharing ratio?

Answer and explanation

Correct answer: 37:44

A’s original share is 2/9. B and C acquire it in the ratio 5:4, so B receives 2/9 × 5/9 = 10/81 and C receives 2/9 × 4/9 = 8/81. B’s new share is 3/9 + 10/81 = 37/81, while C’s new share is 4/9 + 8/81 = 44/81. Therefore, the new ratio is 37:44. Remember that 5:4 is only the acquisition ratio for A’s share, not the final profit-sharing ratio.

Related tags

New RatioPartner RetirementProfit Sharing RatioFraction AcquisitionAccountancy Class 12New RatiosReconstitution Retirement Or Death Of A PartnerAccountancy

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