Question

$A,B$ and $C$ are partners sharing profits in the ratio of $2:2:1$. $C$ retired. The new profit-sharing ratio between $A$ and $B$ will be :

• A. $2:1$
• B. $1:1$
• C. $3:1$
• D. $8:1$

Answer 1

The correct option is B $1:1$

C’s share of profit = 1/5, to be taken by A and B equally.

A gains = 1/5 X 1/2 = 1/10

B gains = 1/5 X 1/2 = 1/10

New share of A = 2/5 + 1/10 = 4/10 + 1/10 = 5/10 = 1/2

New share of B = 2/5 + 1/10 = 4/10 + 1/10 = 5/10 = 1/2

New profit sharing ratio of A and B = 1:1