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A, B and C share profits in the ratio 4:7:4. After B retires, the new profit-sharing ratio of A and C becomes 3:2. What is C’s gaining share?

Answer and explanation

Correct answer: 2/15

C’s old profit share was \(4/(4+7+4)=4/15\). Under the new ratio 3:2, C’s new share is \(2/(3+2)=2/5=6/15\). Therefore, C’s gaining share = new share − old share = \(6/15-4/15=2/15\). Exam tip: do not confuse the new share \(2/5\) with the gaining share; gaining share is always calculated as new share minus old share.

Related tags

Partnership AccountingPartner RetirementNew RatioGaining ShareProfit Sharing RatioNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancy

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