|Assets|| Amount |
|A’s Capital – 51,450||Stock||28,000|
|B’s Capital – 36,750||88,200||Debtors||19,500|
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.