X and Y are partners in a firm sharing profits in the ratio of 3 : 2. Their Balance Sheet as at 31st March, 2018 was as follows: On 1st April, 2018 , 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 1 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 Capital Accounts and opening Balance Sheet.

X and Y are partners in a firm sharing profits in the ratio of 3 : 2.

1.	X and Y are partners in a firm sharing profits in the ratio of 3 : 2. Their Balance Sheet as at 31st March, 2018 was as follows: On 1st April, 2018 , 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 1 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 Capital Accounts and opening Balance Sheet.
Answer» tion: Calculation of firm's good will = Avg. Profit 10,000 + 20,000 + 30,000 ÷ 3 =20,000 Goodwill is 1.5 years purchase = 20,000 x 1.5 = 30,000.30,000 - 12,000( less AMOUNT) = 18,000Z's share = 18,000 × 1/6 = 3,000(Z have to PAY this amount for goodwill) Sacrificing RATIO = old ratio - new ratio. X's Sac. Ratio = 3/5 - 3/6 = 3/30. Y's sac. Raio = 2/5 - 2/6 = 2/30.(Sacrificing ration of X and Y) = 3:2. X's sare of goodwill = 3,000 x 3/5 = 1,800(receive from z) Y's share of goodwill = 3,000 x 2/5 = 1,200(receive from z). This amount will be transferred to their CAPITAL account on credit side.

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