X, Y and Z are equal partners with capitals of Rs. 1,500; Rs. 1,750 and Rs. 2,000 respectively. They agree to admit W into equal partnership upon payment in cash Rs. 1,500 for 1/4th share of the goodwill and Rs. 1,800 as his capital, both sums to remain in the business. The liabilities of the old firm amounted to Rs. 3,000 and the assets, apart from cash, consist of Motors Rs.1,200, Furniture Rs. 400, Stock Rs. 2,650 and Debtors Rs. 3,780. The Motors and Furniture were revalued at Rs. 9450 and Rs. 380 respectively. Pass journal entries to give effect to the above arrangement and also show Balance Sheet of the new firm.
