Blunt, Dodds and Fuller are in partnership. They shared profits in the ratio 1:3:2. It is decided to admit Baxter. It is agreed that goodwill is worth \(£ 60,000\), but that this is not to be brought into the business records. Baxter will bring \(£ 24,000\) cash into the business for capital. The new profit-sharing ratio is to be Blunt 4: Dodds 5: Fuller 2: Baxter 1.

The balance sheet before Baxter was introduced was as follows:

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(a) The entries in the capital accounts of Blunt, Dodds, Fuller and Baxter, the accounts to be in columnar form.

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

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Assets (other than in cash) Cash Total assets Trade payables Net assets Capitals: Blunt Dodds Fuller 66,000 1,200 67,200 (8,400) 58,800 14,000 24,400 20,400 58,800