Tom, Una and Viv are in partnership. They shared profits in the ratio 4:5:1. It is decided to admit Willie. It is agreed that goodwill was worth £30,000 and that it was to be brought into the business records. Willie will bring £20,000 cash into the business for capital. The new profit-sharing ratio is to be Tom 6: Una 7: Viv 2: Willie 5.

The balance sheet before Willie was introduced was as follows:

Show:

(a) The entries in the capital accounts of Tom, Una, Viv, and Willie, the accounts to be in columnar form.

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

Transcribed Image Text:

Assets (other than in cash) 40,000 Cash 6,000 46,000 Liabilities (9,000) 37,000 Capitals: Tom 14,000 Una 18,000 Viv 5,000 37,000