The Balance Sheet of W and R who shared profits in the ratio of 3 : 2 was as follows on January. 01, 2015.

On this date B was admitted as a partner on the following conditions: ltbegt 1. He was to get 4/15 share of profit.
2. He had to bring in Rs 30,000 as his capital.
3. He would pay cash for goodwill which would be based on `2^(½)` years purchase of the profits of the past four years.
4. W and R would withdraw half the amount of goodwill premium brought by B.
5. The assets would be revalued as: Sundry Debtors at book value less a provision of 5%, Stock at Rs 20,000, Plant and Machinery at Rs 40,000, and Patents at Rs 12,000.
6. Liabilities were valued at Rs 23,000, one bill for goods purchased having been omitted from books.
7. Profit for the past four years were :
Profit for the past four years were:
`{:(2011,15000,2013,14000),(2012,20000,2014,17000):}`
Given necessary journal entries and ledger accounts to record the above, and prepare the Balance Sheet after B's admission.

Explanation

The goodwill of the firm is Rs 41250 worked out as under:
`{:("Profits":,),(Year 2011,15000),(Year 2012,20000),(Year 2013,14000),(Year 2014,17000),(,ulbar(66000)):}`
Average Profits `= Rs (66,000)/(4) = Rs = 16,500`
Goodwill at `2½` years purchase = Rs. `16,500 xx (5)/(2) = Rs. 41,250`
B's share of goodwill `= Rs. 41,250 xx (4)/(15) = Rs. 11,000`.




The new proft sharing ratio will be:
`W = (1-(4)/(15)) xx (3)/(5) = (11)/(15) xx (3)/(5) = (33)/(75)`
`R = (1-(4)/(5)) xx (2)/(5) = (11)/(15) xx (2)/(5) = (22)/(75)`
`B = (4)/(15) = (20)/(75)`
The new's ratio is 33: 22: 20.