Question

A, B and C are partners sharing profits in the ratio of `1/2 : 1/4 : 1/4`. New ratio on the retirement of B will be ______.

Options

• 2 : 4

• 1 : 2

• 2 : 1

• `1/4 : 1/2`

Answer 1

A, B and C are partners sharing profits in the ratio of `1/2 : 1/4 : 1/4`. New ratio on the retirement of B will be 2 : 1.

Explanation:

The given profit-sharing ratio is:

A = `1/2`

B = `1/4` 

C = `1/4`

After B retires, the remaining share of the firm (which was B's) will be distributed between A and C in their old ratio.

A’s new share = `(1/2)/(1/2+1/4)=(1/2)/(3/4)=2/3`

C’s new share = `(1/4)/(1/2+1/4)=(1/4)/(3/4)=1/3`

Thus, the new ratio of A and C will be 2 : 1.