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A, B and C share profits in the ratio 2:7:6. When C retires, the new profit-sharing ratio of A and B becomes 3:4. What is the gaining ratio of A and B?

Answer and explanation

Correct answer: 31:11

From the old ratio 2:7:6, A’s old share is 2/15 and B’s old share is 7/15. Under the new ratio 3:4, A’s new share is 3/7 and B’s new share is 4/7. Therefore, A’s gain = 3/7 − 2/15 = 31/105, while B’s gain = 4/7 − 7/15 = 11/105. Hence, the gaining ratio is 31:11. The ratio 3:4 is the new profit-sharing ratio, not the gaining ratio. Exam tip: Calculate each continuing partner’s gain as new share minus old share.

Related tags

Gaining RatioPartner RetirementNew Profit Sharing RatioRatio CalculationAccountancyNew RatiosReconstitution Retirement Or Death Of A PartnerClass 12 Mcq

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