Fitch and Wall have been in partnership for many years sharing profits and losses in the ratio 5 : 3 respectively. The following was their balance sheet as at 31 December 2002.

On 1 January 2003, they decided to admit Home as a partner on the condition that she contributed £12,000 as her capital but that the plant and machinery and stock should be revalued at £16,800 and £6,100 respectively, the other assets, excepting goodwill, remaining at their book values. The goodwill was agreed to be valueless.
You are required to show:

(a) The ledger entries dealing with the above in the following accounts:
(i) Goodwill account, (ii) Revaluation accounts, (iii) Capital accounts;

(b) The balance sheet of the partnership immediately after the admission of Home.

Transcribed Image Text:

Goodwill 12,400 Plant and machinery 16,320 Stock 6,420 Debtors 4,100 Cash at bank 626 11,146 Sundry creditors (5,928) 5,218 33,938 Capital: Fitch Wall 19,461 14,477 33,938