Question

A, B and C were partners in a firm sharing profits in 8 : 4 : 3. B retires and his share is taken up equally by A and C. Find the new profit-sharing ratio.

Answer 1

The new profit-sharing ratio are given below:

Explanation:

Given,

A, B and C were partners sharing profits in the ratio 8 : 4 : 3.

Old Ratio of A, B and C =8: 4: 3

B's Profit ratio $=\frac{4}{15}$

After B's retirement, his share is taken up equally by A and C

B's retires the firm. His Share taken by A and C = 1: 1

Calculation of B's share taken by their partners:

B's Share taken by A

$=\frac{4}{15} \times \frac{1}{2}=\frac{4}{30}$

B's Share taken by C

$=\frac{4}{15} \times \frac{1}{2}=\frac{4}{30}$

Calculation of New Ratio:

New Ratio = Old Ratio + Share acquired from B

$A's = \frac{8}{15}+\frac{2}{15}=\frac{10}{15}$

$C's=\frac{3}{15}+\frac{2}{15}=\frac{5}{15}$

A and C's New Ratio

$=\frac{10}{15}: \frac{5}{15}$ or 2: 1

Thus, the new profit-sharing ratio of A and C will be 2 : 1