Question

X and Y are partners sharing profits in the ratio of 3 : 2. They admitted Z as a new partner for 1/4th share of profits. At the time of admission of Z Investments appeared at ₹ 80,000. Half of the investments to be taken over by X and Y in their profit-sharing ratio at book value. Remaining investments were valued at ₹ 50,000. Pass the necessary journal entries.

Answer 1

Answer:

partnership is an arrangement where parties, known as business partners, agree to cooperate to advance their mutual interests. The partners in a partnership may be individuals, businesses, interest-based organizations, schools, governments or combinations.

Answer 2

Solution:

                                                       Journal  

Sr. No.      Particulars                               Debit Rs.            Credit Rs.

(i)             X's Capital A/c          Dr.           24,000

              Y's Capital A/c           Dr.           16,000

                   To Investment A/c                                           40,000

(Being half of the investment taken over by X and Y)

(ii)              Investment A/c         Dr.           10,000

                      To Revaluation A/c                                        10,000

(Being value of investment increased)

(iii)                  Revaluation A/c     Dr.            10,000

                               To X's Capital A/c                                 6,000

                               To Y's Capital A/c                                 4,000

(Being profit on revaluation transferred to partners capital A/c)