Blunt, Dodds and Fuller are in partnership. They shared profits in the ratio 1:3:2. It is decided to admit Baxter. It is agreed that goodwill is worth £60,000, but that this is not to be brought into the business records. Baxter will bring £24,000 cash into the business for capital. The new profit sharing ratio is to be Blunt 4: Dodds 5: Fuller 2: Baxter 1.

The balance sheet before Baxter was introduced was as follows:

Show:

(a) The entries in the capital accounts of Larry, Mary, Simon and Roger, the accounts to be in columnar form.

(b) The balance sheet after Roger has been introduced.

Transcribed Image Text:

Assets (other than in cash) Cash Creditors Capitals: Blunt Dodds Fuller £ 66,000 1,200 67,200 (8,400) 58,800 14,000 24,400 20,400 58,800