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A, B, C and D share profits in the ratio 2:4:3:1. B retires, and A, C and D acquire B’s share in the ratio 1:2:1. What will be C’s new profit-sharing ratio?

Answer and explanation

Correct answer: 1/2

B’s old share was 4/10. Since A, C and D acquire it in the ratio 1:2:1, C receives 2/4 of B’s share: 2/4 × 4/10 = 2/10. Therefore, C’s new share is 3/10 + 2/10 = 5/10 = 1/2. Exam tip: Add the partner’s old share to the share acquired from the retiring partner; do not report only the acquired portion.

Related tags

Partner RetirementNew Profit Sharing RatioGaining RatioAccountancy Class 12New RatiosReconstitution Retirement Or Death Of A PartnerAccountancyClass 12 Mcq

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