Question

X and Y share profits in the ratio of 5 : 3. Their Balance Sheet as at 31st March, 2018 was:
Z is admitted as a new partner on 1st April, 2018 on the following terms:
(a) Provision for doubtful debts is to be maintained at 5% on Debtors.
(b) Outstanding rent amounted to ₹ 15,000.
(c) An accrued income of ₹ 4,500 does not appear in the books of the firm. It is now to be recorded.
(d) X takes over the Investments at an agreed value of ₹ 18,000.
(e) New Profit-sharing Ratio of partners will be 4 : 3 : 2.
(f) Z will bring in ₹ 60,000 as his capital by cheque.
(g) Z is to pay an amount equal to his share in firm’s goodwill valued at twice the average profits of the last three years which were ₹ 90,000; ₹ 78,000 and ₹ 75,000 respectively.
(h) Half of the amount of the goodwill is to be withdrawn by X and Y.
You are required to pass journal entries, prepare Revaluation Account, Partners Capital and Current Accounts and the Balance Sheet of the new firm.
They admit Z into partnership with 1/8th share in profits on this date. Z brings ₹ 20,000 as his capital and ₹ 12,000 for goodwill in cash. Z acquires his share entirely from X. Following revaluations are also made:
(a) Employees Provident Fund liability is to be increased by ₹ 5,000.
(b) All Debtors are good. Therefore, no provision is required on Debtors.
(c) Stock includes ₹ 3,000 for obsolete items.
(d) Creditors are to be paid ₹ 1,000 more.
(e) Fixed Assets are to be revalued at ₹ 70,000.
Prepare journal entries, necessary accounts and new Balance Sheet. Also, calculate new profit-sharing ratio.

Answer 1

HEYA MATE YOUR ANSWER IS

withdrawn by X and Y.

You are required to pass journal entries, prepare Revaluation Account, Partners Capital and Current Accounts and the Balance Sheet of the new firm.

They admit Z into partnership with 1/8th share in profits on this date. Z brings ₹ 20,000 as his capital and ₹ 12,000 for goodwill in cash. Z acquires his share entirely from X. Following revaluations are also made:

HOPE THIS HELPS ❤️

PLEASE MARK AS BRAINLIEST ❤️

Answer 2

The journal entries, necessary accounts and new Balance Sheet are calculated below:

Explanation:

Given,

X and Y share profits in the ratio of 5 : 3.

Calculation of Distribution of Revaluation Loss

Debit X's Capital A/c

$=18,400 \times \frac{5}{8}=11,500$

Debit Ys Capital A/c

$=18,400 \times \frac{3}{8}=6,900$

Distribution of Accumulated Loss

Debit X's Capital A/c

$= 2,400 \times \frac{5}{8} =1,500$

Debit Y's Capital A/c

$=2,400 \times \frac{3}{8}=900$

Distribution of Workmen's Compensation Fund

X's Capital A/c will be credited

$=5,800 \times \frac{5}{8}=3,625$

Y's Capital A/c will be credited

$=5,800 \times \frac{3}{8}=2,175$

Z's premium for goodwill will be transferred to X's Capital Account because Z receives his entire share from X.

Calculation of New profit sharing Ratio

Old Profit Sharing Ratio ( X and Y ) is 5: 3

Z acquired 1/8 th Share from X

New Share of X $=\frac{5}{8}-\frac{1}{8}=\frac{4}{8}$

New Share of Y $=\frac{3}{8}$

New Share of Z $=\frac{1}{8}$

New Profit Sharing Ratio is =4: 3: 1