Q X, Y and Z are partners sharing profits and losses in the ratio of 3:2:1 Balance - Accountancy - Reconstitution- Retirement/Death of a Partner

Question

Q X, Y and Z are partners sharing profits and losses in the ratio
of 3:2:1 Balance Sheet as at 31st March 2007 was as follows :

Liablities
Rs
Assets
Rs

Sundry Creditors
51000
Buildings
200000

Employee's Provident Fund
9000
Machinery
80000

Capitals:

Sundry Debtors 100000

X 1,52,000

Less: Provisions 10000
90000

Y 1,48,000

Stock
40000

Z 84,000
384,000
Cash at Bank
22000

Profit & Loss A/c
12000

444000

X retired on that date and it was decided to make the following
adjustments :
(i) Stock to be depreciated by 40% and sale of old papers and
materials realised Rs 1,000
(ii) Provision for doubtful debts to be increased to 17% of Sundry
Debtors
(iii) Machinery be depreciated by 40% and buildings be appreciated
by 20%
iv) Partners paid Rs 10,000 to the family of an employee who died
of an heart-attack
v) Goodwill is valued at Rs 30,000
vi) Y and Z decided to share future profits in the ratio of 3 :
2
vii) Y and Z would introduce sufficient capital to pay off X and
have thereafter a sum of Rs 25,000 as Working Capital in a manner
that their Capitals would be in proportion Of their new profit
sharing ratio

Noter : â€‹Working capital's calculation please

Neha Chopra · Accepted Answer

Dear Student

You are getting confused from the term working capital ,
In point no 7 of the question it has been given that Y and Z have
to contribute 22,500 towards working capital Here the calculation
of working capital is not asked, We have to use this amount to
calculate the net amount of capital to be brought by Y and Z as
fresh capital on X's retirement whose workings are given below
:

Adjustment Of Capital

Total Capital of new Firm = Existing capital of Y
and Z + Cash to be brought to pay X + 22,500
(1,28,000 + 71,000 + 1,49,000 +
22,500)
370,500

Y's share of Capital
(3,70,500 x 3/5)
222,300

Existing Capital of Y

128,000

Cash brought in
(222300 -128000)
94,300

Z's share of Capital
(3,70,500 x 2/5)
148,200

Existing Capital of Z

71,000

Cash brought in
(148200 -71000)
77,200

Regards

Liablities	Rs.	Assets	Rs.
Sundry Creditors	51000	Buildings	200000
Employee's Provident Fund	9000	Machinery	80000
Capitals:		Sundry Debtors 100000
X 1,52,000		Less: Provisions 10000	90000
Y 1,48,000		Stock	40000
Z 84,000	384,000	Cash at Bank	22000
		Profit & Loss A/c	12000
	444000		444000

Adjustment Of Capital
Total Capital of new Firm = Existing capital of Y and Z + Cash to be brought to pay X + 22,500	(1,28,000 + 71,000 + 1,49,000 + 22,500)	370,500
Y's share of Capital	(3,70,500 x 3/5)	222,300
Existing Capital of Y		128,000
Cash brought in	(222300 -128000)	94,300

Z's share of Capital	(3,70,500 x 2/5)	148,200
Existing Capital of Z		71,000
Cash brought in	(148200 -71000)	77,200