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A, B and C share profits in the ratio 10:3:2. When C retires, A and B acquire C’s share in the ratio 1:4. What will be the new profit-sharing ratio of A and B?

Answer and explanation

Correct answer: 52:23

C’s original share is \(2/15\). Since A and B acquire it in the ratio 1:4, A gets \(2/75\) and B gets \(8/75\). A’s new share is \(10/15+2/75=52/75\), while B’s new share is \(3/15+8/75=23/75\). Therefore, the new ratio is \(52:23\). Exam tip: Divide the retiring partner’s share in the acquisition ratio and add the respective gains to the old shares.

Related tags

New RatioPartner RetirementProfit Sharing RatioGaining RatioAccountancyNew RatiosReconstitution Retirement Or Death Of A PartnerClass 12 Mcq

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