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

Answer and explanation

Correct answer: 11:17:22

A’s original share is 1/10. This share is acquired by B, C and D in the ratio 1:2:2, so their respective gains are 1/50, 2/50 and 2/50. Therefore, B’s new share is 2/10 + 1/50 = 11/50, C’s is 3/10 + 2/50 = 17/50, and D’s is 4/10 + 2/50 = 22/50. Hence, the new ratio is 11:17:22. Exam tip: Divide the deceased partner’s share according to the gaining ratio and add each gain to the partner’s old share.

Related tags

Partnership AccountsDeath Of PartnerNew RatioGaining RatioProfit Sharing RatioNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancy

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