Fitch and Wall have been in partnership for many years sharing profits and losses in the ratio 5 : 3 respectively. The following was their balance sheet as at 31 December 20X2.

On 1 January 20X3, they decided to admit Home as a partner on the condition that she contributed £12,000 as her capital but that the plant and machinery and stock should be revalued at £16,800 and £6,100 respectively, the other assets excepting goodwill, remaining at their book values. The goodwill was agreed to be valueless.

You are required to show:

(a) The ledger entries dealing with the above in the following accounts:

(i) Goodwill account,

(ii) Revaluation accounts,

(iii) Capital accounts;

(b) The balance sheet of the partnership immediately after the admission of Home.

Transcribed Image Text:

Goodwill Plant and machinery Stock Debtors Cash at bank Sundry creditors Capital: Fitch Wall £ 6,420 4,100 626 11,146 (5,928) £ 12,400 16,320 5,218 33,938 19,461 14,477 33,938