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Question
A, B and C share profits and losses of the firm equally. B retires from business and his share is purchased by A and C in the ratio of 2 : 3. New profit sharing ratio between A and C respectively would be ______.
Options
01 : 01
02 : 02
07 : 08
03 : 05
MCQ
Fill in the Blanks
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Solution
A, B and C share profits and losses of the firm equally. B retires from business and his share is purchased by A and C in the ratio of 2 : 3. New profit sharing ratio between A and C respectively would be 07 : 08.
Explanation:
Old ratio of A, B and C = 1 : 1 : 1
B’s share = `1/3`
A’s Gain = `1/3xx2/5=2/15`
C’s Gain = `1/3xx3/5=1/5`
New ratio = Old ratio + Gain
A’s New share = `1/3+2/15=(5+2)/15=7/15`
C’s new share = `1/3+1/5=(5+3)/15=8/15`
∴ A : C = `7/15:8/15`
= 7 : 8
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