Question

A, B and C are partners with capitals of ₹ 1,00,000; ₹ 75,000 and ₹ 50,000 respectively. They share profits and losses in the ratio of their capital. C retires, His share is acquired by A and B in the ratio of 2 : 1. Calculate the new profit sharing ratio and gaining ratio.

Answer 1

Old profit-sharing ratio is based on capitals:

A : B : C = ₹ 1,00,000 : ₹ 75,000 : ₹ 50,000 = 4 : 3 : 2

C retires, so C's share = `2/9`

C's share is acquired by A and B in the ratio 2 : 1.

New Ratio

A's gain:

`2/9 xx 2/3 = 4/27`

`A = 4/9 + 4/27 = 16/27`

B's gain:

`2/9 xx 1/3 = 2/27`

`B = 3/9 + 2/27 = 11/27`

Therefore,

New ratio = A : B = 16 : 11

Gaining Ratio

Since C's share is acquired by A and B in the ratio 2 : 1:

Gaining ratio = A : B = 2 : 1