Bobby, Duggy and Frankie are in partnership. They shared profit in the ratio 1:3:2. it is decided to admit Basil. It is agreed that goodwill is worth RM 60,000, but that this is not to be brought into the business records. Basil will bring RM 24,000 cash into the business for capital. The new profit sharing ratio is to be Bobby 4: Duggy 5: Frankie 2: Basil 1. The balance Sheet before Basil was introduced was as follow:

Required Show the capital accounts for the partners, goodwill account, and balance sheet if:

(a) Goodwill is maintained within the books (12 Marks)

(b) Goodwill is not maintained within the books (13 Marks)

Assets (other than in cash) Cash Total assets Current Liabilities Net assets RM 66,000 1,200 67,200 (8,400) 58,800 Capital: Bobby Duggy Frankie 14,000 24,400 20,400 58,800