Partnership

Retirement/Death

Medium

common

Sindhu, Neha and Priya are partners, sharing profits in the ratio of 5:3:2. Calculate the new profit sharing ratio and gaining ratio if Neha retires:

New profit sharing Ratio of Sindhu and Priya = 1:2, Gaining Ratio of Sindhu and Priya = 3:2

New profit sharing Ratio of Sindhu and Priya = 3:2, Gaining Ratio of Sindhu and Priya = 5:2

New profit sharing Ratio of Sindhu and Priya = 5:2, Gaining Ratio of Sindhu and Priya = 5:2

New profit sharing Ratio of Sindhu and Priya =7:2, Gaining Ratio of Sindhu and Priya = 4:3

✅ Correct Option: 3

Old profit sharing ratio: Sindhu : Neha : Priya = 5:3:2

When Neha retires and nothing is mentioned about redistribution of her share, the remaining partners (Sindhu and Priya) continue in their old ratio.

New Profit Sharing Ratio:

Sindhu and Priya will share in their old ratio = 5:2

Therefore, New ratio = 5:2

Gaining Ratio:

Gaining Ratio = New Share - Old Share

Sindhu's old share = $\frac{5}{10}$ = $\frac{1}{2}$

Sindhu's new share = $\frac{5}{7}$ (as total of 5+2 = 7)

Sindhu's gain = $\frac{5}{7} - \frac{5}{10}$ = $\frac{50-35}{70}$ = $\frac{15}{70}$ = $\frac{3}{14}$

Priya's old share = $\frac{2}{10}$ = $\frac{1}{5}$

Priya's new share = $\frac{2}{7}$

Priya's gain = $\frac{2}{7} - \frac{2}{10}$ = $\frac{20-14}{70}$ = $\frac{6}{70}$ = $\frac{3}{35}$

Gaining Ratio = $\frac{3}{14}$ : $\frac{3}{35}$

Multiplying by 70: $15:6$ = 5:2

The gaining ratio is the same as the new profit sharing ratio because when nothing specific is mentioned, the remaining partners gain in their existing ratio.

2023: 29 May Shift 2

From the following identify the items which are payable to retiring partner, if mentioned in deed:

A. Credit balance of his/her Capital/Current Account

B. Share of goodwill

C. Goodwill of the firm

D. Share in revaluation gain/loss

E. Share in accumulated profits (Reserves)

Choose the correct answer from the options given below:

2024

A, B and C are partners sharing profits in the ratio of 3:2:1. C died on 1st July, 2023. On this date, final accounts were prepared to ascertain profits for the period. It resulted in a profit of ₹ 1,75,000 to the firm. To give effect to the above:

2022: 15 July Shift 2

Ram, Mohan and Roy are Partner in the ratio of 8:6:4 Ram retires, Mohan and Roy decided to share profits in the ratio of 10:6. Calculate gaining ratio.

2026: 21 May Shift 1

Bhim, Swati and Adita are partners sharing profits and losses in the ratio of 5:3:2 respectively. On March 31, 2025, Swati retired. Revaluation of assets and reassessment of liabilities resulted in a loss of Rs. 1,90,000. Journal entry for this would be:

2026: 29 May Shift 2

Sonu, Monu and Gopal are partners in a firm sharing profits and losses in the ratio of 3:2:1. Balance sheet shows workmen compensation reserve of Rs. 48,000. On retirement of Sonu, liability for workmen compensation reserve Rs. 24,000 is to be accounted. What amount of workmen compensation reserve is to be shown in the balance sheet of the reconstituted firm?

2023: 20 June Shift 2

Select the partner(s) who will compensate the deceased partner for the share of goodwill at the time of death.

Sindhu, Neha and Priya are partners, sharing profits in the ratio of 5:3:2. Calculate the new profit sharing ratio and gaining ratio if Neha retires:

Solution

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