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A, B and C share profits in the ratio 7:4:3. A dies, and B and C acquire A’s share in the ratio 2:5. What will be the new profit-sharing ratio of B and C?

Answer and explanation

Correct answer: 3:4

A’s share is 7 out of the total 14 parts, i.e. 7/14. B receives 2/7 of A’s share, equal to 2/14, while C receives 5/7 of A’s share, equal to 5/14. Therefore, B’s new share is 4/14 + 2/14 = 6/14, and C’s new share is 3/14 + 5/14 = 8/14. Thus, the new ratio is 6:8 = 3:4. Exam tip: add each partner’s acquired share to their original share and reduce the resulting ratio.

Related tags

Partnership AccountsRetirement Or DeathNew RatioProfit Sharing RatioAcquisition Of ShareNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancy

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