Illustration of Admission of a new partner
XYZ have been trading as equal partners having capital contributions of £300,000, £250,000 and £200,000 respectively. They agreed to admit W who agrees to pay capital of £350 which is inclusive of his share of goodwill. The new profit sharing ration will not be X:Y:Z:W : 4:3:2:1. Goodwill has been agreed at £200,000.
Required:
Prepare the partners capital accounts to record admission of W and assuming that Goodwill is not to be retained in the accounts.
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Capital account
|
|
|
X
|
Y
|
X
|
W
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|
X
|
Y
|
Z
|
W
|
|
Goodwill
|
80
|
160
|
40
|
20
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Bal. b/d
|
300
|
250
|
200
|
-
|
|
Bal c/d
|
286.667
|
256.667
|
226.666
|
330
|
Goodwill
|
66.667
|
66.667
|
66.666
|
-
|
|
|
|
|
|
|
bank
|
|
|
|
350
|
|
|
366.667
|
316.667
|
266.666
|
350
|
|
366.667
|
316.667
|
226.667
|
350
|