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

Answer and explanation

Correct answer: 7:10:13

D’s original share is 4/10. Since this share is acquired equally by A, B and C, each receives an additional 4/30. Their new shares are A = 3/30 + 4/30 = 7/30, B = 6/30 + 4/30 = 10/30, and C = 9/30 + 4/30 = 13/30. Therefore, the new ratio is 7:10:13. Exam tip: When a retiring partner’s share is acquired equally, add an equal fraction of that share to each remaining partner’s original share.

Related tags

Partnership ReconstitutionPartner RetirementNew Profit Sharing RatioGaining RatioEqual AcquisitionRetirement Or Death Of A PartnerReconstitution Of PartnershipReconstitution

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