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A, B and C share profits in the ratio 5:9:6. After C’s retirement, the new profit-sharing ratio of A and B becomes 4:5. What is A’s gaining share?

Answer and explanation

Correct answer: 7/36

A’s old share was \(5/(5+9+6)=5/20=1/4\). Under the new ratio 4:5, A’s new share is \(4/(4+5)=4/9\). Therefore, A’s gaining share = new share − old share = \(4/9-1/4=(16-9)/36=7/36\). Option B is only the new share, not the gaining share. In an exam, use ‘new share − old share’ to calculate a partner’s gain.

Related tags

Partner RetirementGaining ShareNew Profit Sharing RatioReconstitutionAccountancy Class 12New RatiosReconstitution Retirement Or Death Of A PartnerAccountancy

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