X and Y are partners sharing profits in the ratio of 3 : 1. Z is admitted as a partner for which he pays RS.30,000 for goodwill in cash. X, Y and Z decide to share the future profits in equal porportion. You are required to pass a single Journal entry to give effect to the above arrangement.

Explanation

Dr Cash A/c RS.30,000 and Y's Capital A/c RS.7,500, Cr. X's Capital A/c -RS.37,500.