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Balance Sheet of J and K who share profits in the ratio of 3 : 2 is as follows:

Liabilities Assets
Reserve

J’s Capital

K’s Capital

1,00,000

1,50,000

1,00,000

Cash

Other Assets

2,00,000

1,50,000

3,50,000

3,50,000

M joins the firm from 1st April, 2023 for half share in the future profits.

He is to pay ₹ 1,00,000 as goodwill and ₹ 3,00,000 for capital. Draft the Journal entries and prepare Balance Sheet in each of the following cases:

a) if M gets his share of profits in the profit-sharing ratio of the old partners.

b) if M gets his share of profits in equal proportion from the old partners

c) if M gets his share of profits in the ratio of 3 : 1 from the old partners, determine the future profit-sharing ratio of the partners in each case.

Anurag Pathak Changed status to publish May 24, 2023
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