Question

A,B and C were partners in a firm sharing ratio of 5:4:3 .B retired and his share was divided equally between A and C . Calculate the new profit sharing ratio of A and C

Answer 1

Explanation:

★ Old Ratio :

A : B : C = 5 : 4 : 3

• A's Share = 5/12
• B's Share = 4/12
• C's Share = 3/12

• B retired and his share was divided equally between A and C

• B's Share = 4/12

• B's Share taken by A =

⇒ 4/12 × 1/2 = 4/24

• B's Share taken by C =

⇒ 4/12 × 1/2 = 4/24

★ New Profit Sharing Ratio :

New Ratio = Old Ratio + Share acquired from B

• A's New Share =

⇒ 5/12 + 4/24 = (10 + 4)/24

⇒ 14/24

• C's New Share =

⇒ 3/12 + 4/24 = (6 + 4)/24

⇒ 10/24

★ New Profit Sharing Ratio :

• A : B = 14/24 : 10/24

⇒ 14 : 10 = 7 : 5

Therefore, the new profit sharing ratio of A and C = 7 : 5.

Answer 2

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