Question

X, Y and Z are partners in a firm sharing profits in the ratio of 3 : 2 : 1. On 1st April, 2009, Y retires from the firm. X and Z agree that the capital of the new firm shall be fixed at ₹ 2,10,000 in the profit-sharing ratio. The Capital Accounts of X and Z  after all adjustments on the date of retirement showed balance of ₹ 1,45,000 and ₹ 63,000 respectively. State the amount of actual cash to be brought in or to be paid 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" = 2,10,000 xx 3/4 = "Rs" 1.57,500`

`"Z's New Capital" = 2,10,000 xx 1/4 = "Rs" 52,000`

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)