A and B are carrying on business in partnership and sharing profits and losses in the ratio of 3 : 2. Their Balance Sheet as at 31st March, 2019 stood as:   

Liabilities   Amount
Assets   Amount
A’s Capital – 51,450Stock28,000
B’s Capital – 36,75088,200Debtors19,500

They admit C into partnership on 1st April, 2019 and give him 1/8th share in future profits on the following terms:
(a) Goodwill of the firm be valued at twice the average of the last three years’ profits which amounted to Rs. 21,000; Rs. 24,000 and Rs. 25,560.
(b) C is to bring cash for the amount of his share of goodwill.
(c) C is to bring cash Rs. 15,000 as his capital.
Pass Journal entries recording these transactions, draw out the Balance Sheet of the new firm and determine new profit-sharing ratio.


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