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.   

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

Computation of New profit Sharing Ratio

               

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

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

 

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