X, Y and Z are equal partners with capitals of ₹ 1,50,000, ₹ 1,75,000 and ₹ 2,00,000 respectively. They agree to admit W into equal partnership upon payment in cash of ₹ 1,50,000 for one-fourth share of the goodwill
X, Y and Z are equal partners with capitals of ₹ 1,50,000, ₹ 1,75,000 and ₹ 2,00,000 respectively. They agree to admit W into equal partnership upon payment in cash of ₹ 1,50,000 for one-fourth share of the goodwill and ₹ 1,80,000 as his capital, both sums to remain in the business. The liabilities of the old firm amount to ₹ 3,00,000 and the assets apart from cash, consist of Motors ₹ 1,20,000; Furniture ₹ 40,000; Stock ₹ 2,65,000; Debtors ₹ 3,78,000.
The Motors and Furniture were revalued at ₹ 95,000 and ₹ 38,000 respectively. Draft Journal entries necessary to give effect to the above arrangement and show the initial Balance Sheet of the new firm.
[Ans. Loss on revaluation ₹ 27,000; Capital Accounts : X ₹ 1,91,000; Y ₹ 2,16,000; Z ₹ 2,41,000 and W ₹ 1,80,000. B/S Total ₹ 11,28,000.]
Anurag Pathak Answered question August 30, 2024
Solution:-
Note:-
(i) W comes for 1/4th share equal to the old patners. As old ratio is 1 : 1 : 1, the new ratio would be 1 : 1 : 1 : 1.
(ii) In the absence of any further information, the sacrificing ratio is always equal to the old ratio i.e., 1 : 1 : 1.
Anurag Pathak Edited answer August 30, 2024
