X, Y and Z are partners sharing profits in the ratio of 5 : 3 : 2. Y retires on 1st April, 2019 from the firm, on which date capitals of X, Y and Z after all adjustments are ₹ 1,03,680, ₹ 87,840 and ₹ 26,880 respectively. The Cash and Bank Balance on that date was ₹ 9,600. Y is to be paid through amount brought in by X and Z in such a way as to make their capitals proportionate to their new profit-sharing ratio which will be X 3/5 and Z 2/5. Calculate the amount to be paid or to be brought in by the continuing partners assuming that a minimum Cash and Bank balance of ₹ 7,200 was to be maintained and pass the necessary Journal entries.

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Solution

$\begin{array}{l} Total capital of firm before retirement = 1, 03, 680 + 87, 840 + 26, 880 = Rs 2,18,400 \\ Availability of cash = 9,600 - 7,200 (Minimum Balance) = Rs 2,400 \\ Combined new capital of X and Z = Rs 2,16,000 \\ X's new capital = 2, 16, 000 \times \frac{3}{5} = Rs 1,29,600 \\ Existing capital of X= Rs 1, 03, 680 \\ So, X has to bring = 1, 29, 600 - 1, 03, 680 = Rs 25,920 \\ Z's new capital = 2, 16, 000 \times \frac{2}{5} = Rs 86,400 \\ Existing capital of Z = Rs 26, 880 \\ So, Z has to bring = 86, 400 - 26, 880 = Rs 59,520 \end{array}$

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Q. X, Y and Z are partners sharing profits in the ratio of 5 : 3 : 2 . Y retires on 1st April , 2018 from the firm , on which date capitals of X, Y and Z after all adjustments are ₹ 1,03,680 , ₹ 87,840 and ₹ 26,880 respectively. The Cash and Bank Balance on that date was ₹ 9,600. Y is to be paid through amount brought in by X and Z in such a way as to make their capitals proportionate to their new profit-sharing ratio which will be X 3/5 and Z 2/5. Calculate the amount to be paid or to be brought in by the continuing partners assuming that a minimum Cash and Bank Balance of ₹ 7,200 was to be maintained and pass the necessary journal entries .

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Liabilities and Capital		₹	Assets	₹
Sundry Creditors		39,750	Bank (Minimum Balance)	15,000
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Liabilities		₹	Assets	₹
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