first part:-

The balance sheet of partners Jamal and Mazin who shared the profits in the ratio of 3:2 was as

follows as on 1st January 2020.

Balance sheet of Jamal and Mazin as at 1^st January 2020.

Liabilities	Amount (OMR)	Assets	Amount (OMR)
Bank Loan Partners Capital Jamal 40,000 Mazin 30,000	20,000 70,000	Cash in hand Sundry Debtors 20,000 (-) Provision 300 Building Plant & Machinery Trademark	5,000 19,700 25,000 32,300 8000
	90,000		90,000

On January 2020 Syed is admitted as a partner on the following conditions;

1. The new partner has to get 4/15 share of profit.
2. He has to bring OMR 30,000 as his capital.
3. He should pay cash for goodwill which would be based on 2.5 years purchase of the average profits of past four years.
4. Jamal and Mazin can withdraw half the amount of goodwill premium brought by Syed.
5. The assets would be revalued as follows; Sundry debtors at book value less a provision of 5%. Plant & Machinery OMR 40,000 and Trademark at OMR 12,000.
6. Liabilities were valued at OMR 23,000. One bill for goods purchased having been omitted from books.
7. Profit for the past four years were; OMR 15,000, OMR 20,000, OMR 14,000 and OMR 17,000.

You are required to prepare

1. Journal entries for the above transactions. (6 marks)
2. Capital Accounts of partners. (4 marks)

second part:-

1. Using the information in Case 2 prepare reconstituted Balance sheet of the firm. (4 marks)
2. If some goodwill already exists in the books and the new partner brings his share of goodwill in cash how will you deal with existing amount of goodwill? (1 mark)