A,B,C are partners sharing profits and losses equally B retired from the firm,C gained 1/3 of B's share and 1/6 - Accountancy - Reconstitution- Retirement/Death of a Partner

Question

A,B,C are partners sharing profits and losses equally B retired
from the firm,C gained 1/3 of B's share and 1/6 of B's share was
transferred to Reserve Remaining was taken over by A Calculate New
profit sharing ratio

Sagar Gupta · Accepted Answer

Old Profit Sharing ratio = A : B : C = 1 : 1 : 1

B Retires and his share is taken over by A & C and some part is even transferred to reserve.

B’s share taken over by C = 1/3

B’s share transferred to Reserve = 1/6

B’s share taken over by A = B’s total share – Share taken over by C - Share transferred to reserve

$= \frac{1}{3} - [\frac{1}{3} \times \frac{1}{3}] - [\frac{1}{3} \times \frac{1}{6}] = \frac{1}{6}$

Computation of New profit Sharing Ratio

$N e w \Pr o f i t S h a r i n g R a t i o = O l d R a t i o + G a i n f r o m B' s S h a r e A = \frac{1}{3} + \frac{1}{6} = \frac{3}{6} C = \frac{1}{3} + [\frac{1}{3} \times \frac{1}{3}] = \frac{4}{9}$

New Profit Sharing Ratio = A : C = 9 : 8

and balance 1/18th of the profits will be transferred to the reserves.

1

A,B,C are partners sharing profits and losses equally.B retired from the firm,C gained 1/3 of B's share and 1/6 of B's share was transferred to Reserve.Remaining was taken over by A. Calculate New profit sharing ratio.