Question

H, P and S were partners in a firm sharing profits in the ratio of 4 : 3 : 3. On August 1, 2017, P died. His 20% share was acquired by H and remaining by S. Calculate the new profit sharing ratio.

Answer 1

1. Calculate the share gained by H and S from P:

P's total share = `3/10`

Share acquired by H = 20% of P's share

`3/10 xx 20/100 = 6/100`

Share acquired by S = Remaining 80% of P's share

`3/10 xx 80/100 = 24/100`

2. Calculate the new share of H and S:

H's New Share = Old Share + Gained Share

`4/10 + 6/100 = 40/100 +6/100 = 46/100`

S's New Share = Old Share + Gained Share

`3/10 + 24/100 = 30/100 + 24/100 = 54/100`

3. Simplify the ratio:

New Ratio (H : S) = 46 : 54

Dividing by 2 gives 23 : 27