Following is the Balance Sheet of X and Y as at 31st March, 2019 who are partners in a firm sharing profits and losses in the ratio of 3 : 2 respectively :

Creditors36,000Cash at Bank15,000
General Reserve 36,000Debtors – 60,000
Capital A/c : Less: Provision for Doubtful Debts – (2,400)57,600
X – 1,80,000Patents44,400
Y – 90,0002,70,000Investments24,000
Current A/c :Fixed Assets 2,16,000
X – 30,000Goodwill30,000
Y – 6,00036,000 
 3,87,000 3,87,000

Z is admitted as a new partner on 1st April, 2019 on the following terms:
(a) Provision for doubtful debts is to be maintained at 5% on Debtors.
(b) Outstanding rent amounted to Rs. 15,000.
(c) An accrued income of Rs. 4,500 does not appear in the books of the firm. It is now to be recorded.
(d) X takes over the Investments at an agreed value of Rs. 18,000.
(e) New Profit-sharing Ratio of partners will be 4 : 3 : 2.
(f) Z will bring in Rs. 60,000 as his capital by cheque.
(g) Z is to pay an amount equal to his share in firm’s goodwill valued at twice the average profit of the last three years which were Rs. 90,000; Rs. 78,000 and Rs. 75,000 respectively.
(h) Half of the amount of goodwill is to be withdrawn by X and Y.  
You are required to pass Journal entries, prepare Revaluation Account, Partners’ Capital and Current Accounts and the Balance Sheet of the new firm.


Leave a Reply