Wilson, Player and Sharp are in partnership. They shared profits in the ratio 2:4:3. It is decided to admit Titmus. It is agreed that goodwill is worth £72,000 and that it is to be brought into the business records. Titmus will bring £30,000 cash into the business for capital. The new profit sharing ratio is to be Wilson 5: Player 8: Sharp 4: Titmus 3. The statement of financial position before Titmus was introduced was as follows:

Show:

(a) The entries in the capital accounts of Wilson, Player, Sharp and Titmus, the accounts to be in columnar form.

(b) The statement of financial position after Titmus has been introduced.

Transcribed Image Text:

Assets (other than in cash) Cash Total assets Liabilities Net assets Capitals: Wilson Player Sharp E 200,000 2,000 202,000 (31,000) 171,000 57,000 76,000 38,000 171,000