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A, B and C share profits in the ratio 9:5:4. A dies, and B and C acquire A’s share in the ratio 2:7. What will be the new profit-sharing ratio?

Answer and explanation

Correct answer: 7:11

In the old ratio, A’s share is 9 parts. B and C acquire these 9 parts in the ratio 2:7, so B receives 2 parts and C receives 7 parts. Thus, B’s new share is 5+2=7 and C’s new share is 4+7=11, giving the new ratio 7:11. Exam tip: Do not treat the gaining ratio as the new ratio; add the acquired portions to the partners’ original shares.

Related tags

Partnership AccountsRetirement Or DeathNew Profit Sharing RatioGaining RatioAccountancy Class 12New RatiosReconstitution Retirement Or Death Of A PartnerAccountancy

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