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A, B and C share profits in the ratio 5:2:3. B retires, and A and C acquire B’s share in the ratio 3:2. What will be the new ratio?

Answer and explanation

Correct answer: 31:19

The new ratio is found by adding each continuing partner’s acquired portion to his or her old share. The old total is 10, so B’s retiring share is 2/10 = 1/5. A acquires 3/5 of this, equal to 3/25, while C acquires 2/5, equal to 2/25. A’s new share is 5/10 + 3/25 = 25/50 + 6/50 = 31/50. C’s new share is 3/10 + 2/25 = 15/50 + 4/50 = 19/50. Since the common denominator cancels, the new ratio is 31:19. Therefore option A is correct. The other choices either retain the old ratio or confuse the acquisition ratio with the final profit-sharing ratio.

Related tags

RetirementNew RatioFraction AcquisitionNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancyClass 12 Mcq

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