Question

(a) W, X, Y and Z are partners sharing profits and losses in the ratio of 1/3, 1/6, 1/3 and 1/6 respectively. Y retires and W, X and Z decide to share the profits and losses equally in future. Calculate gaining ratio. (b) A, B and C are partners sharing profits and losses in the ratio of 4 : 3 : 2. C retires from the business. A is acquiring 4/9 of C's share and balance is acquired by B. Calculate the new profit-sharing ratio and gaining ratio.

Solution

(a) Old Ratio (W, X, Y and Z) = or 2 : 1 : 2 : 1 New Ratio (W, X and Z) = 1 : 1 : 1 Gaining Ratio = New Ratio − Old Ratio ∴Gaining Ratio = 0 : 1 : 1 (b) Old Ratio (A, B and C) = 4 : 3 : 2 C’s Profit Share = A acquires 4/9 of C’s Share and remaining share is acquired by B. New Profit Share = Old Profit Share +  Share acquired from C ∴ New Profit Ratio (A and B) = 44 : 37 Gaining Ratio = New Ratio − Old Ratio ∴Gaining Ratio = 8 : 10 or 4 : 5 AccountancyTS Grewal Vol. I (2019)All

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