Question

X,Y and Z are partners sharing profits in the ratio of 2:2:1.Y retires and his share is entirely taken by Z.Calculate the new ratio​

Answer 1

ANSWER :

• ❖ If X,Y and Z are partners sharing profits in the ratio of 2:2:1 and Y retires and his share is entirely taken by Z; then the New profit sharing ratio will be 2 : 3.

__________________________________________________________

SOLUTION :

❒ Given :-

• Profit sharing ratio of X,Y and Z = 2 : 2 : 1

• Y retires and his share is entirely taken by Z

❒ To Calculate :-

• New profit sharing ratio of X and Z = ?

❒ Calculation :-

• ★ Old profit sharing ratio = 2 : 2 : 1

➯ X's share of profit = $\sf{\dfrac{2}{5}}$

➯ Y's share of profit = $\sf{\dfrac{2}{5}}$

➯ Z's share of profit = $\sf{\dfrac{1}{5}}$

• ★ Y retires and his share is entirely taken by Z

∴ Z's share will be = $\sf{\dfrac{2}{5}}$ + $\sf{\dfrac{1}{5}}$

➝ Z's new share of profit = $\sf{\dfrac{3}{5}}$

∴ The new profit sharing ratio of X and Z = $\sf{\dfrac{2}{5}}$ : $\sf{\dfrac{3}{5}}$

➜ New profit sharing ratio = 2 : 3 ✪

• Hence, the new profit sharing ratio of X and Z is 2 : 3.

__________________________________________________________

KNOW MORE :

❍ New Profit Sharing Ratio :-

• ✎ In the context of retirement of a partner, new profit sharing ratio is the ratio in which the remaining partners of a firm on share the profits after the retirement of the partner.

• ✎ The new profit sharing ratio of each remaining partner after retirement of a partner will be the sum of his old share of profit in the firm and the portion of retiring partner share of the profit acquired by the remaining partners.

• ✎ Generally, new profit sharing ratio is determined with reference to the partnership deed or agreement of the partnership firm.