(a) Ram, Krishan, and Bhagwan are partners sharing profits and losses in the ratio of 5:3:2. Find out the new profit-sharing ratio for the remaining partners when:
(i) Ram retires,
(ii) Krishan retires,
(iii) Bhagwan retires.
Answer (2)
When Ram retires, the new profit-sharing ratio for Krishan and Bhagwan becomes 3:2. If Krishan retires, Ram and Bhagwan share the profits in a 5:2 ratio. Lastly, if Bhagwan retires, the ratio for Ram and Krishan is 5:3.
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In partnership accounting, the profit-sharing ratio indicates how partners distribute profits and losses. In this question, we need to determine the new profit-sharing ratio for the remaining partners when one partner retires.
Let's break down the scenarios:
Ram Retires :
Original ratio: 5 (Ram) : 3 (Krishan) : 2 (Bhagwan)
When Ram retires, his share of the profits is removed, so we adjust the ratio between the remaining partners (Krishan and Bhagwan).
Therefore, the new profit-sharing ratio would be the existing ratio between Krishan and Bhagwan: New Ratio when Ram retires = 3 : 2
Krishan Retires :
Original ratio: 5 (Ram) : 3 (Krishan) : 2 (Bhagwan)
When Krishan retires, his share is removed.
Therefore, the new profit-sharing ratio between the remaining partners (Ram and Bhagwan) is: New Ratio when Krishan retires = 5 : 2
Bhagwan Retires :
Original ratio: 5 (Ram) : 3 (Krishan) : 2 (Bhagwan)
When Bhagwan retires, his share is removed.
Therefore, the new profit-sharing ratio between the remaining partners (Ram and Krishan) is: New Ratio when Bhagwan retires = 5 : 3
In summary, the new ratios are derived by omitting the share of the retiring partner from the original ratio and then maintaining the remaining partners' shares in the same proportion.
