Balance Sheet of J and K who share profits in the ratio of 3 : 2 is as follows:

BALANCE SHEET as at 31st March, 2019

Reserve1,00,000Cash 2,00,000
J’s Capital – 1,50,000Other Assets1,50,000
K’s Capital – 1,00,0002,50,000 
 3,50,000 3,50,000

M joins the firm from 1st April, 2019 for a half share in the future profits. He is to pay Rs. 1,00,000 for goodwill and Rs. 3,00,000 for capital. Draft the Journal entries and prepare Balance Sheet in each of the following cases:
(a) If M acquires his share of profit from the firm in the profit-sharing ratios of the partners.
(b) If M acquires his share of profits from the firm in equal proportions from the original partners.
(c) If M acquires his share of profit in the ratio of 3: 1 from the original partners, ascertain the future profit-sharing ratio of the partners in each case.


Leave a Reply