Question

C, D & E are partners sharing profits & losses in the proportion of 1/2,1/3 & 1/6. D retired and the new profit sharing ratio between C & E is 3:2 and the reserve of Rs. 12,000 is divided among the partners in the ratio -

• A. 2,000: 4,000: 6,000
• B. 5,000: 5,000: 2,000
• C. 4,000: 6,000: 2,000
• D. 6,000: 4,000: 2,000

Answer 1

The correct option is D 6,000: 4,000: 2,000

Old ratio (C, D and E) = 1/2, 1/3 and 1/6 i.e., 3 : 2 : 1

At the time of retirement of a partner all profits and reseves is distributed among partners in their old ratio.

Reserves will be distributed as follows:

A = 12000 * (3/6) =6000

B = 12000 * (2/6) = 4000

C = 12000 * (1/6) = 2000