Question

Q.2X and Y were partners in a firm sharing profits in 3:1 ratio. They admitted Z as a new
partner for 1/4th share in the profits. Z was to bring Rs.20,000 as his capital and the capitals
of X and Y were to be adjusted on the basis of Z's capital in the profit sharing ratio. The
balance sheet of Z and Y on 31-3-2006 was as follows:
Balance Sheet of X and Y on 31-3-2006
Liabilities
Amount Assets
Amount
Rs.
Rs.
Creditors
18,000 Cash
5,000
Bills payable
10,000 Debtors 17,000
General Reserve 12,000 Stock
12,000
Capitals :
Machinery 21,000
X 25,000
Building 20,000
Y 10,000
35,000
75,000
75,000
Other terms of agreement on Z's admission were as follows:
1. Z will bring Rs.6,000 for his share of goodwill.
II. Building will be valued at Rs.25,000 and machinery at Rs.19,000
111 A provision at 5% on debtors will be created for bad debts
Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet of X, Y
and Z

Answer 1

Answer:

1. Stock a/c.... Dr. 60000

Debtors a/c... Dr. 80000

Land a/c.... Dr. 100000

Plant and machinery a/c... Dr. 40000

To Z's Capital a/c 130000

To Premium for goodwill a/c 150000

(Being capital and premium for goodwill brought in by C in the form of assets)

2. Premium for Goodwill a/c.... Dr. 150000

To X's Capital a/c 90000

To Y's Capital a/c 60000

(Being premium for goodwill distributed among partners in the ratio of 3:2)

Working Note:

1. Calculation of Z's share of goodwill:

Z's share of Goodwill= 600000 * 1/4= 150000

Z's share of capital = 280000 - 150000 = 130000

2. Distribution of premium for goodwill:

X's share= 3/5 * 150000= 90000

Y's share= 2/5 * 150000= 60000