X and Y share profits in the ratio of 5:3. Their Balance Sheet as at 31st March, 2020 was: LiabilitiesAssetsCreditors15,000 Cash at BankEmployees' Provident Fund10,000 Sundry Debtors20,000Workmen Compensation Reserve5,800 Less: Provision for Doubtful Debts 600Capital A/cs:Stock70,000Fixed Assets31,000 1,01,000 Profit and Loss A/C1,31,80019,40025,00080,0002,4001,31,800They admit Z into partnership with 1/8th share in profits on 1st April, 2020. Z brings * 20,000 as his capitaland 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 newprofit-sharing ratio.

X and Y share profits in the ratio of 5:3. Their Balance Sheet as at 3

1.	X and Y share profits in the ratio of 5:3. Their Balance Sheet as at 31st March, 2020 was: LiabilitiesAssetsCreditors15,000 Cash at BankEmployees' Provident Fund10,000 Sundry Debtors20,000Workmen Compensation Reserve5,800 Less: Provision for Doubtful Debts 600Capital A/cs:Stock70,000Fixed Assets31,000 1,01,000 Profit and Loss A/C1,31,80019,40025,00080,0002,4001,31,800They admit Z into partnership with 1/8th share in profits on 1st April, 2020. Z brings * 20,000 as his capitaland 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 newprofit-sharing ratio.
Answer» rect financial entries are - Journal -CASH A/c Dr. 32,000 To Z’s Capital A/c 20,000 To Premium for goodwill 12,000 (Being capital and goodwill brought in by Z) Premium for goodwill A/c Dr. 12,000 To X’s Capital A/c 12,000 (Being the premium given to X as he sacrificed his share in favour of Z) Revaluation A/c Particulars Amount Particulars Amount STOCK 3,000 Provision on debtors 600 CREDITORS 1,000 Loss transferred to: Fixed ASSETS 10,000 X capital A/c 11,500Provident Fund 5,000 Y capital A/c 6,900Total 19000 19000Balance SheetLiabilities Amount Assets Amount Creditors 16,000 Cash 32,000 Capitals: Fixed Assets 70,000 X 74,125 Sundry Debtors 20,000 Y 26,275 Land and Building 5,000 Z 20,000 Stock 22,000Total 1,49,000 1,49,000

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