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

Answer and explanation

Correct answer: 6:7:7

A’s original share is 3/10. B, C and D acquire it in the ratio 2:1:3, so their gains are 1/10, 1/20 and 3/20 respectively. Therefore, their new shares are B = 2/10 + 1/10 = 3/10, C = 3/10 + 1/20 = 7/20, and D = 2/10 + 3/20 = 7/20. Thus, the new ratio is 3/10:7/20:7/20 = 6:7:7. Exam tip: Divide the deceased partner’s share in the gaining ratio and add each gain to the partner’s original share.

Related tags

AccountancyPartnershipReconstitutionDeath Of PartnerNew RatioGaining RatioNew RatiosReconstitution Retirement Or Death Of A Partner

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