A, B and C share profits and losses of the firm equally. B retires from business and his share is purchased by A anc C in the ratio of `2:3`. New profit sharing ratio between A and C respectively would be:
Answers
Explanation:
Old ratio (A, B and C) = 1 : 1 : 1
B's share = 1/3
B's share taken by A = (1/3) * (4/10) = 4/30 or 2/15
B's share taken by C = (1/3) * (6/10) = 6/30 or 3/15
New ratio = Old ratio + Share taken from B
A's new share = (1/3) + (2/15) = 7/15
C's new share = (1/3) + (3/15) = 8/15
Therefore, new profit sharing ratio between A and C is 7 : 8
Explanation:
Solution :
★ Old Ratio :
A : B : C = 1 : 1 : 1
- A's share = 1/3
- B's share = 1/3
- C's share = 1/3
B retires from business and his share is purchased by A and C in the ratio of 2:3.
- B's share = 1/3
B's share purchased by A =
1/3 × 2/5 = 2/15
B's share purchased by C =
1/3 × 3/5 = 3/15
★ New profit sharing ratio =
A's new share =
1/3 + 2/15 = (5 + 2)/15
7/15
B's new share =
1/3 + 3/15 = (5 + 3)/15
8/15
New profit sharing ratio =
- A : B
- 7/15 : 8/15
7 : 8
Therefore,
New profit sharing ratio between A and C respectively would be 7 : 8