The statement of financial position of A. Barnes and C. Darwin at 31 March 2011 is as follows:

The partners share profits and losses: Barnes three-fifths and Darwin two-fifths. At the date of the above statement of financial position, it was agreed to admit E. Fox who was to bring cash of £25,000 into the firm as capital. The new profit and loss ratio would be Barnes, one-half; Darwin, one-third; and Fox, one-sixth. Barnes and Darwin agreed the following revaluation amounts prior to the admission of Fox. Any goodwill arising is to remain in the ledger.

Required:

(a) Prepare the journal entries to record the above.

(b) Prepare the statement of financial position of the new business.

(c) Show by journal entry how the necessary adjustment would be made if the partners agreed that goodwill should not remain in the ledger.

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Non-current assets Building Fittings Current assets Inventory Accounts receivable Total assets Current liabilities Bank Accounts payable Total liabilities Net assets Capital accounts Barnes Darwin Total capital 16,000 5,000 3,000 8,000 41 51,000 29,000 80,000 21,000 101,000 (11,000) 90,000 60,000 30,000 90,000