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Question
X, Y and Z are partners sharing profits in the ratio of 5 : 3 : 2. Y retires on 1st April, 2019 from the firm, on which date capitals of X, Y and Z after all adjustments are ₹ 1,03,680, ₹ 87,840 and ₹ 26,880 respectively. The Cash and Bank Balance on that date was ₹ 9,600. Y is to be paid through amount brought in by X and Z in such a way as to make their capitals proportionate to their new profit-sharing ratio which will be X 3/5 and Z 2/5. Calculate the amount to be paid or to be brought in by the continuing partners assuming that a minimum Cash and Bank balance of ₹ 7,200 was to be maintained and pass the necessary Journal entries.
Solution
Total capital offirm before retirement = `1,03,680 + 87,840 + 26,880 = "Rs" 2,18,400`
Availability of cash = `9,600 - 7,200 ("minimum balance") = "Rs" 2,400`
Combined new capital of X and Z = `"Rs" 2,16,000`
X's new capital = `2,16,000 xx 3/5 = "Rs" 1,29,600`
Existing capital of X = `"Rs" 1,03,680`
So, X has to bring = `1,29,600 - 1,03,680 = "Rs" 25,920`
Z's new capital = `2,16,00 xx 2/5 = "Rs" 86,400`
Existing capital of Z = `"Rs" 26,880`
So, Z has to bring = `86,400 - 26,880 = "Rs" 59,520`
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Assets | Amount (₹) |
|
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|
Liabilities |
Amount (₹) |
Assets |
Amount (₹) |
||
| Bills Payable |
12,000 |
Freehold Premises | 40,000 | ||
| Sundry Creditors | 28,000 | Machinery | 30,000 | ||
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20,000 |
|
|
| Y | 20,000 | Less: Provision for Doubtful Debts |
1,000 |
19,000 |
|
| Z | 28,000 |
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Cash |
7,000 |
|
|
1,30,000 |
1,30,000 |
||||
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|
Liabilities |
₹ |
Assets |
₹ |
||
|
Sundry Creditors |
40,000 |
Goodwill |
25,000 |
||
|
Bills Payable |
15,000 |
Leasehold |
1,00,000 |
||
|
Workmen Compensation Reserve |
30,000 |
Patents | 30,000 | ||
|
Capital A/cs: |
Machinery | 1,50,000 | |||
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| S |
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| T |
75,000 |
3,50,000 |
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|
4,35,000 |
4,35,000 |
||||
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| Liabilities | Amount (₹) |
Assets | Amount (₹) |
||
| Sundry Creditors | 13,800 | Furniture | 16,000 | ||
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| 1,47,200 | 1,47,200 | ||||
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| Liabilities |
Amount (₹) |
Assets |
Amount (₹) |
|
| Capital A/cs: | Land and Building | 3,50,000 | ||
| A | 2,50,000 | Machinery | 2,40,000 | |
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