A, B, and C were in partnership, sharing profits in the ratio of 3:2:1 respectively, B retires and the new profit sharing ratio between A and C is 3:2. The gaining ratio is:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → 3:7
The gaining ratio is the ratio in which the continuing partners acquire the retiring partner’s share. Each partner’s gain is new share − old share.
Old shares: A = 3/6, C = 1/6 (B had 2/6)
New shares: A = 3/5, C = 2/5
A’s gain = 3/5 − 3/6 = 18/30 − 15/30 = 3/30
C’s gain = 2/5 − 1/6 = 12/30 − 5/30 = 7/30
Gaining ratio of A and C = 3/30 : 7/30 = 3:7
Check: 3/30 + 7/30 = 10/30 = 2/6, which is B’s whole share. The new ratio 3:2 is not the gaining ratio, because A and C did not gain in that proportion.