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

Answer and explanation

Correct answer: 3:2

B’s old profit share is 3 out of 10, or 3/10. A acquires 2/3 of B’s share, which is 2/10, while C acquires 1/3, which is 1/10. Thus, A’s new share is 4/10 + 2/10 = 6/10 and C’s new share is 3/10 + 1/10 = 4/10. Therefore, the new ratio is 6:4 = 3:2. Remember that 2:1 is the gaining ratio, not the new profit-sharing ratio.

Related tags

Partner RetirementNew Profit Sharing RatioGaining RatioAccountancy Class 12New RatiosReconstitution Retirement Or Death Of A PartnerAccountancyClass 12 Mcq

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