Accountancy Part AReconstitution of Partnership Firm: Retirement and Death

Pari, Param, Prizleen are partners sharing profits and losses in the…

Pari, Param, Prizleen are partners sharing profits and losses in the ratio of 5 : 3 : 2. Param retires. Her share is taken by Pari and Prizleen in the ratio of 2 : 1. Calculate the new profit sharing ratio of Pari and Prizleen.

Answer & explanation

Correct answer: option 1

The correct answer is Option (1) → 7 : 3

Param’s share of 3/10 is taken by Pari and Prizleen in the ratio 2 : 1, and each one’s gain is added to the old share.

Pari’s gain = 3/10 × 2/3 = 2/10
Prizleen’s gain = 3/10 × 1/3 = 1/10

Pari’s new share = 5/10 + 2/10 = 7/10
Prizleen’s new share = 2/10 + 1/10 = 3/10

New profit sharing ratio = 7 : 3

5 : 2 is the old ratio of Pari and Prizleen, which would apply only if they took Param’s share in their old ratio.

Note: The NCERT Do it Yourself item below has a misprint: it says Priya’s share “is taken by Priya and Pratistha”; it should read Puja and Pratistha.

NCERT (2026-27 edition):
Do it Yourself – “… 6. Puja, Priya, Pratistha are partners sharing profits and losses in the ratio of 5 : 3 : 2. Priya retires. Her share is taken by Priya and Pratistha in the ratio of 2 : 1. Calculate the new profit sharing ratio.”