Question

(Cast Sample
79. X and Y are partners sharing profits in the ratio of 2:1. Their Balance Sheet as at 31st March, 204
Liabilities
Assets
25,000
18,000
Sundry Creditors
General Reserve
Capital A/cs:
X
Cash/Bank
Sundry Debtors
Stock
Investments
Printer
Fixed Assets
75,000
62,000 1,37,000
Y
1,80,000
-
They admit Z into partnership on 1st April, 2020 on the following terms:
(a) Z brings in 40,000 as his capital and he is given 1/4th share in profits.
(b) Z brings in * 15,000 for goodwill, half of which is withdrawn by old partners.
(c) Investments are valued at 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 on 31st March, 2020 is 1,000.
(f) By bringing in or wit
hdrawing cash, the Capitals of X and Y are to be made proportionate to that
Z on their profit-sharing basis., prepare Revaluation Account Capital Accounts and new Balance Sheet of the​

Answer 1

Admission of a Partner

Explanation:

 Calculation of Sacrificing Ratio:

Old Ratio -    X : Y ⇒ 2 : 1 or  $\frac{2}{3}$ :  $\frac{1}{3}$    

                        Z's Share = $\frac{1}{4}$

Let,  total Profit = $1 - \frac{1}{4}$  = $\frac{3}{4}$

So, New Ratio of X =  $\frac{2}{3}$ × $\frac{3}{4}$  = $\frac{6}{12}$

     New Ratio of Y = $\frac{1}{3}$ ×  $\frac{3}{4}$ = $\frac{3}{12}$

     New Ratio of Z = $\frac{1}{4}$ or $\frac{3}{12}$

⇒   X : Y : Z   =   $\frac{6}{12}$ :  $\frac{3}{12}$ :  

New Ratio   ⇒ X : Y : Z = 2 : 1 : 1

Sacrificing Ratio = old ratio - new ratio

   Sacrificing Ratio of X = $\frac{2}{3}$ - $\frac{6}{12}$ = $\frac{2}{12}$

   Sacrificing Ratio of Y =  $\frac{1}{3}$ - $\frac{3}{12}$ = $\frac{1}{12}$

⇒ X : Y = $\frac{2}{12}$ : $\frac{1}{12}$

Sacrificing Ratio ⇒ X : Y = 2 : 1

Distribution of Goodwill :

X's share of goodwill = 15,000 × $\frac{2}{3}$  = 10,000

Y's share of goodwill = 15,000 × $\frac{1}{3}$ = 5,000

Adjustment of Capital:

 Z's Capital = 40,000

   Z's Share = $\frac{1}{4}$

Total Capital of New Firm = 40,000 × $\frac{4}{1}$ = 1,60,000

X's new capital = 1,60,000 × $\frac{2}{4}$ = 80,000

Y's new capital = 1,60,000 × $\frac{1}{4}$ = 40,000

             

                           Please refer to the attached pic for Revaluation A/c, Partner's Capital A/c and Balance Sheet