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A, B and C share profits in the ratio 2:6:2. B retires, and A and C acquire B’s share in the ratio 3:1. What will be the new profit-sharing ratio of A and C?

Answer and explanation

Correct answer: 13:7

B’s original share is 6/10 = 12/20. In the 3:1 acquisition ratio, A receives 3/4 of B’s share, or 9/20, while C receives 1/4, or 3/20. A’s new share is 4/20 + 9/20 = 13/20, and C’s new share is 4/20 + 3/20 = 7/20. Therefore, the new ratio is 13:7. Remember that 3:1 is the gaining ratio for B’s share, not the final profit-sharing ratio.

Related tags

Retiring PartnerGaining RatioNew Profit Sharing RatioPartnership ReconstitutionAccountancy Class 12New RatiosReconstitution Retirement Or Death Of A PartnerAccountancy

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