A, B and C are sharing profits and losses in the ratio of 5:3:2. C retires. His share will be distributed between A and B equally. Calculate new ratio of A and B.
Answer & explanation
Correct answer: option 3
The correct answer is option 3- 3:2.
Old ratio = 5:3:2 (A, B & C)
C's share is distributed between other partners equally.
A gains = 2/10 x 1/2
= 2/20
B gains = 2/10 x 1/2
= 2/20
New share = Old share + Gaining share
A's new share = 5/10 + 2/20
= (10+2)/20
= 12/20
B's new share = 3/10 + 2/20
= (6+2)/20
= 8/20
New ratio = 12:8
= 3:2