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

Answer and explanation

Correct answer: 7/40

B’s old profit share was 9 out of the total 4+9+7=20, so it was 9/20. Under the new ratio 3:5, B’s new share is 5/(3+5)=5/8. Therefore, B’s gaining share = new share − old share = 5/8 − 9/20 = 25/40 − 18/40 = 7/40. Remember that the gaining share is the increase in share, not the partner’s new share itself; hence 5/8 is not the answer.

Related tags

Partner RetirementGaining ShareNew Profit-Sharing RatioAccountancy Class 12Ratio CalculationNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancy

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