X and Y are partners sharing profits in the ratio of 2 : 1. Their Balance Sheet as at 31st March, 2019 was:

Sundry Creditors25,000Cash/Bank5,000
General Reserve18,000Sundry Debtors15,000
Capital A/c :Stock10,000
X – 75,000Investments8,000
Y – 62,0001,37,000Printer5,000
  Fixed Assets1,37,000

They admit Z into partnership on the same date on the following terms:
(a) Z brings in Rs. 40,000 as his capital and he is given 1/4th share in profits.
(b) Z brings in Rs. 15,000 for goodwill, half of which is withdrawn by old partners.
(c) Investments are valued at Rs. 10,000. X takes over Investments at this value.
(d) Printer is to be reduced (depreciated) by 20% and Fixed Assets by 10%.
(e) An unrecorded stock of Stationery on 31st March, 2019 is Rs. 1,000.
(f) By bringing in or withdrawing cash, the Capitals of X and Y are to be made proportionate to that of Z on their profit-sharing basis.
Pass Journal entries, prepare Revaluation Account, Capital Accounts and new Balance Sheet of the firm.


Leave a Reply