# Q. X, Y and Z are partners sharing profits and losses in the ratio of 3:2:1 . Balance Sheet as at 31st March. 2007 was as follows :  Liablities Rs.  Assets Rs. Sundry Creditors 51000 Buildings 200000 Employee's Provident Fund 9000 Machinery 80000 Capitals:   Sundry Debtors   100000   X     1,52,000   Less: Provisions     10000 90000 Y     1,48,000   Stock 40000 Z         84,000 384,000 Cash at Bank 22000     Profit & Loss A/c 12000   444000   444000 X retired on that date and it was decided to make the following adjustments :  (i) Stock to be depreciated by 40% and sale of old papers and materials realised Rs. 1,000.  (ii)  Provision for doubtful debts to be increased to 17% of Sundry Debtors.  (iii) Machinery be depreciated by 40% and buildings be appreciated by 20%.  iv) Partners paid Rs. 10,000 to the family of an employee who died of an heart-attack.  v) Goodwill is valued at Rs. 30,000. vi) Y and Z decided to share future profits in the ratio of 3 : 2.  vii) Y and Z would introduce sufficient capital to pay off X and have thereafter a sum of Rs. 25,000 as Working Capital in a manner that their Capitals would be in proportion Of their new profit sharing ratio. Noter : â€‹Working capital's calculation please.

Dear Student

You are getting confused from the term working capital ,
In point no. 7 of the question it has been given that Y and Z have to contribute 22,500 towards working capital. Here the calculation of working capital is not asked, We have to use this amount to calculate the net amount of capital to be brought by Y and Z as fresh capital on X's retirement whose workings are given below :

 Adjustment Of Capital Total Capital of new Firm = Existing capital of Y and Z + Cash to be brought to pay X + 22,500 (1,28,000 + 71,000 + 1,49,000 + 22,500) 370,500 Y's share of Capital (3,70,500 x 3/5) 222,300 Existing Capital of Y 128,000 Cash brought in (222300 -128000) 94,300 Z's share of Capital (3,70,500 x 2/5) 148,200 Existing Capital of Z 71,000 Cash brought in (148200 -71000) 77,200

Regards

• -19
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