question_answer

X, Y and Z are partners sharing profits in the ratio of 4 : 3 : 2. On 1st April, 2017, Y gave a notice to retire from the firm. X and Z decided to share future profits in the ratio of 1 : 1. The capital accounts of X and Z after all adjustments showed a balance of Rs. 21,500 and Rs. 40,250 respectively. The total amount to be paid to Y was Rs. 47,750. This amount was to be paid by X and Z in such a way that their capitals become proportionate to their new profit sharing ratio. Pass necessary journal entries in the books of the firm for the above transactions. Show your working clearly.

Answer:

                                                                        JOURNAL

Date	Particulars		LF	Amt (Dr)	Amt (Cr)
2017	Cash A/c	Dr		47,750
Apr 1	To X?s Capital A/c				33,250
	To Z?s Capital A/c				14,500
	(Being cash to be paid to Y brought in by X and Z)
Apr 1	Y?s Capital A/c	Dr		47,750
	To Cash A/c				47,750
	(Being cash paid to John for his capital)

Working Notes 1.

Particulars	Amt (Rs.)
Adjusted Capital of X and Z \[(Rs.\,21,500+Rs.\,40,250)\]	61,750
(+) Amount to be Paid to Y	47,750
Total Capital of New Firm	1,09,500

2. Amount to be Brought in or Withdrawn

	Particulars	Nandan (Rs.)	Rosa (Rs.)
I.	New Capital (Rs. 1,09,500 in new ratio, i.e. 1 :1)	54,750	54,750
II.	Existing Capitals	(21,500)	(40,250)
III.	Cash to be Brought in (Paid off) (I-II)	33,250	14,500