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

Answer and explanation

Correct answer: 11:14

B’s share is 2/10. A and C acquire it in the ratio 1:4, so A gains 2/10 × 1/5 = 1/25 and C gains 2/10 × 4/5 = 4/25. A’s new share is 4/10 + 1/25 = 11/25, while C’s new share is 4/10 + 4/25 = 14/25. Therefore, the new ratio is 11:14. Exam tip: First divide the deceased partner’s share according to the gaining ratio, then add each gain to the partner’s old share.

Related tags

Death Of PartnerNew RatioGaining RatioPartnership AccountsReconstitutionNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancy

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