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A, B and C share profits and losses in the ratio 3:4:3. After A's retirement, the new ratio of B and C becomes 7:5. What is C's gain?

Answer and explanation

Correct answer: 7/60

C's old share was \(3/(3+4+3)=3/10\). Under the new ratio 7:5, C's new share is \(5/(7+5)=5/12\). Therefore, C's gain = new share − old share = \(5/12-3/10=(25-18)/60=7/60\). Exam tip: gain is calculated as the excess of the new share over the old share.

Related tags

Gain CalculationPartner RetirementNew RatioProfit SharingAccountancyNew RatiosReconstitution Retirement Or Death Of A PartnerClass 12 Mcq

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