Following is the Balance Sheet of X and Y as at 31st March, 2019. Z is admitted as a partner on that date when the position of X and Y was:

X’s Capital – 10,000Cash in Hand     9,000  
Y’s Capital – 8,00018,000Debtors11,000
General Reserve16,000Building8,000
Workmen Compensation Reserve4,000Machinery10,000
 50,000 50,000

X and Y share profits in the proportion of 3 : 2. The following terms of admission are agreed upon:
(a) Revaluation of assets: Building Rs. 18,000; Stock Rs. 16,000.
(b) The liability on Workmen Compensation Reserve is determined at Rs. 2,000.
(c) Z brought in as his share of goodwill Rs. 10,000 in cash.
(d) Z was to bring in further cash as would make his capital equal to 20% of the combined capital of X and Y after above revaluation and adjustments are carried out.
(e) The further profit-sharing proportions were: X−2/5th, Y−2/5th and Z−1/5th.
Prepare new Balance Sheet of the firm and Capital Accounts of the Partners.


Leave a Reply