Larry, Mary and Simon are in partnership. They shared profits in the ratio 2:5:3. It is decided to admit Roger. It is agreed that goodwill was worth £10,000, but that this is not to be brought into the business records. Roger will bring £4,000 cash into the business for capital. The new profit sharing ratio is to be Larry 3: Mary 4: Simon 2: Roger 1.

The balance sheet before Roger 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) 11,000 Cash 2,500 Creditors 13,500 (1,500) 12,000 Capitals: Larry 3,000 Mary 5,000 Simon 4,000 12,000