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A, B and C share profits in 4:3:5. C retires and his share is taken by A and B in 2:3. What will be the new ratio?

Answer and explanation

Correct answer: 1:1

The governing rule is that each continuing partner’s new share equals the old share plus the portion acquired from the retiring partner. The original ratio totals 4 + 3 + 5 = 12. Thus A’s old share is 4/12, B’s old share is 3/12, and C’s retiring share is 5/12. A and B acquire C’s share in the ratio 2:3. A receives 2/5 × 5/12 = 2/12, while B receives 3/5 × 5/12 = 3/12. Therefore A’s new share is 4/12 + 2/12 = 6/12, and B’s new share is 3/12 + 3/12 = 6/12. Their ratio is 6:6, which simplifies to 1:1. Option A is correct; the other options represent an old or acquisition ratio or an incorrect calculation.

Related tags

New RatioRetiring PartnerShare AcquisitionAccountancy Class 12New RatiosReconstitution Retirement Or Death Of A PartnerAccountancyClass 12 Mcq

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