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A, B and C share profits in the ratio 5:8:7. B retires, and A and C acquire his share in the ratio 5:3. What will be the new profit-sharing ratio of A and C?

Answer and explanation

Correct answer: 10:10

Initially, A, B and C have shares of 5, 8 and 7 parts, respectively. B’s 8 parts are acquired by A and C in the ratio 5:3, so A receives 5 additional parts and C receives 3 additional parts. Thus, A’s new share is 5+5=10 and C’s new share is 7+3=10. Therefore, the new ratio is 10:10, or 1:1. Exam tip: Divide the retiring partner’s share in the gain ratio of the acquiring partners and add those gains to their old shares.

Related tags

Retirement Of PartnerNew RatioGain RatioPartnership AccountsNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancyClass 12 Mcq

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