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A, B and C share profits in the ratio 4:9:7. C retires, and the new profit-sharing ratio of A and B becomes 3:5. What is A’s gaining share?

Answer and explanation

Correct answer: 7/40

A’s old profit share was 4 out of a total ratio of 20, so it was 4/20 = 1/5. After C’s retirement, A’s new share is 3/(3+5) = 3/8. Therefore, A’s gaining share = new share − old share = 3/8 − 1/5 = 15/40 − 8/40 = 7/40. Option B is A’s new share, not the gaining share. Exam tip: Always calculate the gaining share as the new share minus the old share.

Related tags

Gaining ShareRetirement Of PartnerNew Profit Sharing RatioProfit Sharing RatioFraction CalculationNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancy

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