Question

X, Y and Z are partners in a firm sharing profits in the ratio 3 : 2 : 1. On April 1^st 2009, Y retires from the firm X and Z agree that the capital of the new firm shall be fixed at Rs 2,10,000 in the profit sharing ratio. The capital accounts of X and Z after all adjustment on the date of retirement showed balances of Rs 1,45,000 and Rs 63,000 respectively. State the amount of actual cash to be brought in or to be paid off to the partners.

Answer 1

Old Ratio (X, Y, and Z) = 3 : 2 : 1

Y retires from the firm.

∴New Ratio (X and Z) = 3 : 1

 

Total capital of the New Firm = Rs 2,10,000 

X's New Capital=`2,10,000xx3/4="Rs"1,57,500` 

Z's New Capital=`2,10,000xx1/4= "Rs" 52,500` 

Ascertainment of Actual Cash to be brought in or to be paid to the partners

Particulars	X	Z
New Capital	1,57,500	52,500
Existing Capital	1,45,000	63,000
Cash Paid/Brought in	(12,500) (Brought in)	10,500 (Paid)