X and Y share profits in the ratio of 5 : 3. Their Balance Sheet as at 31st March, 2023 was:
X and Y share profits in the ratio of 5 : 3. Their Balance Sheet as at 31st March, 2023 was:
| Liabilities | ₹ | Assets | ₹ | ||
| Creditors
Employee’s Provident Fund Workmen Compensation Reserve X Y |
70,000 31,000 |
15,000
10,000 5,800
1,01,000 |
Cash at Bank
Sundry Debtors Stock Fixed Assets Profit & Loss A/c |
20,000
|
5,000
19,400 25,000 80,000 2,400 |
| 1,31,800 | Â 1,31,800 |
They admit Z into partnership with 1/8th share in profits on 1st April, 2023. Z brings ₹ 20,000 as his capital and ₹ 12,000 for goodwill in cash. Z acquires his share from X. Following revaluations are also made:
a) Employees’ Provident Fund liability is to be increased by ₹ 5,000.
b) All Debtors are good.
c) Stock includes ₹ 3,000 for obsolete items. Hence, are to be written off.
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.
Anurag Pathak Changed status to publish May 25, 2023
