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A, B, C and D share profits in the ratio 6:5:4:3. After B’s death, A, C and D acquire B’s share in the ratio 2:2:1. What will be the new profit-sharing ratio?

Answer and explanation

Correct answer: 4:3:2

The total of the old ratio is 18, so B’s share is 5/18. This share is acquired by A, C and D in the ratio 2:2:1; therefore, A receives 2/18, C receives 2/18 and D receives 1/18. Their new shares are A = 6/18 + 2/18 = 8/18, C = 4/18 + 2/18 = 6/18 and D = 3/18 + 1/18 = 4/18. Thus, the new ratio is 8:6:4, which simplifies to 4:3:2. In an examination, always express the final ratio in its simplest form.

Related tags

Partnership AccountsPartner DeathNew Profit-Sharing RatioReconstitutionNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancyClass 12 Mcq

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