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ILLUSTRATION 3. A and B had started a firm of Chartered Accountants as equal partners under the style of Y & Co with effect from
ILLUSTRATION 3. A and B had started a firm of Chartered Accountants as equal partners under the style of "Y & Co" with effect from January 1, 2011. Each of the partners had contributed $ 1,000 towards the capital of the firm and was allowed to draw $200 per month. On January 1, 2012 they took in C as a third partner with equal share with the two original partners and he contributed $1,000 towards the capital of the firm. He too was entitled to draw $200 per month. A got a part-time job elsewhere from Jan. 1, 2013 and considering that he would be unable to devote his full time towards the business of the firm agreed to leave half of his share in the profits to be appropriated equally between B and C and his drawing was reduced to $100 per month since January, 2013, Later on, B got a full-time job from 1st January, 2014 and in consequence A had to leave his part-time job to devote his full-time in the firm. It was arranged that B would retain only a quarter of his earlier share in the firm and would be drawing nothing from January, 2014. A and C would be drawing at the rate of $300 per month instead. The interest surrendered by B would be appropriated equally by A and C. On 31st December, 2014 B decided to retire altogether from the firm. You are required to ascertain the amount due to B by the firm from the following: (a) Assets and Liabilities position on relative dates: Balance of Cash Outstanding Liabilities and at Bank Bills Fixed Assets Date 3 $ $ $ 31-12-2011 3,412 2,116 600 328 31-12-2012 5,219 3,417 1,000 736 31-12-2013 8,476 4,894 1,200 1,570 31-12-2014 9,787 6,158 1,600 1,345 (b) B's Share of goodwill is to be taken at twice the amount of profits earned by him during the year 2014. (c) The partners have drawn exactly what they could draw under the agreement and nothing else. (d) No interest on capital or drawings is to be calculated
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