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A, B and C share profits in the ratio 6:2:2. A dies, and B and C acquire A’s share in the ratio 1:2. What will be the new profit-sharing ratio of B and C?

Answer and explanation

Correct answer: 2:3

A’s profit share is 6/10. B acquires 1/3 of A’s share, which is 2/10, while C acquires 2/3, which is 4/10. Therefore, B’s new share is 2/10 + 2/10 = 4/10, and C’s new share is 2/10 + 4/10 = 6/10. Thus, the new ratio is 4:6 = 2:3. The ratio 1:2 is only the proportion in which A’s share is acquired, not the final ratio of B and C.

Related tags

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

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