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Q72.X and Y are partners in a firm sharing profits in the ratio of 3 : 2. Their Balance Sheet as at 31st March, 2019 was as follows:
Outstanding Rent Creditors
Workmen Compensation Reserve Capital A/cs: X
Less : Provision for Doubtful Debts Stock
Profit and Loss A/c Machinery
On 1st April, 2019, they admitted Z as a partner for 1/6th share on the following terms:
(i) Z brings in 40,000 as his share of Capital but he is unable to bring any amount for Goodwill. (ii) Claim on account of Workmen Compensation is 3,000.
(iii) To write off Bad Debts amounted to 6,000. (iv) Creditors are to be paid 2,000 more.
(v) There being a claim against the firm for damages, liabilities to the extent of 2,000 should be created. (vi) Outstanding rent be brought down to 11,200.
(vii) Goodwill is valued at 112 years' purchase of the average profits of last 3 years, less 12,000. Profits for the last 3 years amounted to 10,000; 20,000 and 30,000. Pass Journal entries, prepare Partners' Capital Accounts and opening Balance Sheet.
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