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A, B and C share profits in the ratio 4:6:5. When C retires, the new profit-sharing ratio of A and B becomes 2:5. What is B’s gaining share?

Answer and explanation

Correct answer: 11/35

B’s old profit share was 6 out of the total ratio 4+6+5=15, so it was 6/15=2/5. After C’s retirement, B’s new share is 5/(2+5)=5/7. Therefore, B’s gaining share = new share − old share = 5/7 − 2/5 = 25/35 − 14/35 = 11/35. The option 5/7 represents B’s new share, not the gaining share. Exam tip: Always calculate the gaining share as the difference between the new share and the old share.

Related tags

Gaining ShareRetirement Of PartnerNew Profit Sharing RatioPartnership AccountingFraction CalculationNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancy

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