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A, B and C share profits in the ratio 2:5:3. When A retires, B and C acquire A’s share in the ratio 2:1. What will be the new profit-sharing ratio of B and C?

Answer and explanation

Correct answer: 19:11

A’s original share is \(2/10=1/5\). B acquires \(2/3\) of A’s share, i.e. \(2/15\), while C acquires \(1/3\), i.e. \(1/15\). Thus, B’s new share is \(5/10+2/15=19/30\), and C’s new share is \(3/10+1/15=11/30\). Therefore, the new ratio is \(19/30:11/30=19:11\). Exam tip: First calculate the retiring partner’s share, then distribute it among the gaining partners in the stated gaining ratio.

Related tags

Retirement Of PartnerGaining RatioNew Profit Sharing RatioPartnership AccountsNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancyClass 12 Mcq

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