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

Answer and explanation

Correct answer: 17:18:15

D’s original share is 2/10. When this share is acquired by A, B and C in the ratio 2:3:5, their respective gains are 4/100, 6/100 and 10/100. Therefore, their new shares are 30/100+4/100=34/100, 30/100+6/100=36/100 and 20/100+10/100=30/100. Thus, the new ratio is 34:36:30, which simplifies to 17:18:15. Exam tip: distribute the retiring partner’s share according to the stated acquisition ratio, then add each gain to the partner’s old share.

Related tags

AccountancyPartnershipReconstitutionRetirement Of PartnerNew RatioAcquisition RatioNew RatiosReconstitution Retirement Or Death Of A Partner

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