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CBSE Class 12 Accountancy Important Questions Chapter 4 Admission of A Partner
Accounting For Partnership Firms : Admission of A Partner
1 : (When new partner acquires his share from old partners in the old ratio).
A and B are partners in a firm sharing profits and losses in the ratio 1:2. TI admitted C into the partnership and decided to give him 1/3rd share of the full profits. Find the new ratio of the partners.
Solution :
(i) Calculation of Sacrifice Share :
A’s sacrifice = 1/3 of 1/3 = 1/9
B’s sacrifice = 2/3 of 1/3 = 2/9
Sacrificing Ratio = 1/9 : 2/9 = 1:2
(ii) Calculation of new Profit sharing Ratio :
New share = Old share – Sacrifice share
A’s new share = 1/3 – 1/9 = 
B’s new share = 2/3 – 2/9 = 
C’s new share = 1/9 + 2/9 = 3/9
2 : (When new partner acquires his share from old partners in agreed share) L and M are partners in a firm sharing profits and losses in the ratio of 7:3. They admitted N for 3/7th share which he takes 2/7th from L and 1/7 from M Calculate the new profit sharing ratio.
Solution
(i) As sacrifice share of old partners are given in the question itself, hence there is no need to calculated it.
(ii) Calculation of New profit sharing ratio :
New share = 7/10 – 2/7 = 
L’s new share = 3/10 – 1/7 = 
N’s new share = 2/7 + 1/7 = 3/7 (given)
New ratio among L, M and N = 29/70 : 11/70 : 3/7 = 29:11:30/70 29 : 11 : 30
Case (iii) When new partner acquires his/her share from old partners in certain ratio.
3 : X and Y are partners in a firm sharing profit and losses in the ration of 3:2 Z is admitted as partner in the firm for 1/6th share in profits. Z acquires his share from X and Y in the ratio of 2 : 1 Calculate new profit sharing ratio of partners.
Solution :
(i) Calculation of Sacrifice share :
Given sacrificing Ratio = X : Y 2 : 1,
Therefore,
X’s sacrifice = 2/3 of 1/6 = 2/18
Y’s sacrifice = 1/3 of 1/6 = 1/18
(ii) Calculation of New Profit Sharing Ratio :
New share = Old share – Sacrifice share
X’s new share = 3/5 – 2/8 = 
Y’s new share = 2/5 – 1/18 = 
Z’s new share = 2/168 + 1/18 or 1/6 (Given)
New ratio among X, Y and Z = 44/90 : 31/90 : 1/6 = 44 : 31 : 15/19 44 : 31 : 15
Case (iv) When new partner acquires his/her share form old partners as a fraction of their share.
4 : (When new partner acquire his share form old partners as a fraction of their share).
A and B are partners in a firm sharing profit and losses in the ratio of 5:3. A Surrenders 1/5th of his share, whereas B surrenders 1/3 of his share in favour of C, a new partner. Calculate the new profit sharing ratio.
Solution :
(i) Calculation of sacrifice share
A sacrifices 1/5 of his share i.e. 1/5 of 5/8 = 1/8
B sacrifices 1/3th of his share i.e. 1/3 of 3/8 = 3/24 or 1/8
(ii) Calculation of New profit sharing Ratio
New share = Old share – sacrifice share
A’s new share = 5/8 – 1/8 = 4/8
B’s new share = 5/8 – 1/8 = 2/8
C’s new share = 1/8 + 1/8 = 2/8
New ratio among A, B and C = 4/8 : 2/8 : 2/8 = 4 : 2 : 2/8 = 2:1:1
Case (v) When new partner does not acquire his/her share from all partners.
5 : (When new partner does not acquire his share from all partners) A, B and C are partners sharing profits in the ratio of 3:2:1. They admit D for 1/6 share. C would retain his old share. Calculate new ratio of all partners.
Solution :
(i) Calculation of sacrifice share : (Only A and B sacrifice in ratio of 3 : 2)
(ii) A’s sacrifices = 3/5 of 1/6 = 3/30 or 1/10
B’s sacrifices = 2/5 of 1/6 = 2/30 or 1/15
C’s sacrifices = Nil
(iii) Calculation of New profit sharing Ratio :
New share = Old share – Sacrifice share
A’s new share = 3/6 – 1/10 = 
B’s new share = 2/6 – 1/15 = 
C’s new share = 1/6 – 0 = 1/6
D’s new share = 1/10 + 1/15 = 
New ratio among A, B, C and D
24/60 : 24/90 : 1/6 : 1/6 : 1/6
= 
= 12 : 8 : 5 : 5
Case (vi) When more than one partner is admitted.
6 : (When more than one partner is admitted simultaneously) : X and Y are partners sharing profits in the ratio of 3:2. They admit P and Q as new partners. X surrendered 1/3 of his share in favour of P and Y surrendered ¼ of his share in favour of Q. Calculate the new profit sharing ratio of X, Y, P and Q.
Solution :
(i) Calculation of Sacrifice share :
X surrenders 1/3 of his share in favour of P = 
Y surrenders 1/4 of his share in favour of Q = 
X’s new share =
= 
Y’s new share = 
= 
New profit sharing ratio = X : Y : P : Q = 6/15 : 6/20 : 3/15 : 2/20 = 4 : 3 : 2 : 1
7 : (All partners sacrifice) : A and B partners sharing profits and losses in the ratio of 3:2. They admit C into partnership for 1/4 share in profits. C’s brings Rs. 3,00,000 as capital and Rs. 1,00,000 as goodwill. New profit sharing ratio of the partners shall be 3:3:2. Pass necessary Journal entries.
Journal
| Date | Particulars | L.F. | Debit (Rs.) | Credit (Rs.) |
| | Bank A/c Dr. To Premium for Goodwill A/c To C’s Capital A/c (Being the amount of goodwill and capital brought in by new partner C) | 4,00,000 1,00,000 | 1,00,000 3,00,000 90,000 10,000 | |
| Premium for Goodwill A/c Dr. To Premium for Goodwill A/c To C’s Capital A/c (Being the amount of goodwill distributed between A and B in their sacrificing ratio i.e., 9 : 1) |
8. (Sacrificing ratio is to be calculate) : A and B are partners in a firm sharing profits and losses in the ratio of 3 : 2. C is admitted as a new partner. A Surrenders 1/5 of his share and B 2/5 of his share in favour of C. For purpose of C’s admission, goodwill of the is valued at Rs. 75,000 and C brings his share of goodwill in cash which is retained in the firm’s books. Journalise the above transactions.
Journal
| Date | Particulars | L.F. | Debit (Rs.) | Credit (Rs.) |
| | Bank A/c Dr. To Premium for Goodwill A/c (Being the amount of goodwill and capital brought in by new partner C) | 21,000 21,000 | 21,000 9,000 12,000 | |
| Premium for Goodwill A/c Dr. To Premium for Goodwill A/c To C’s Capital A/c (Being the amount of goodwill distributed between A and B in their sacrificing ratio i.e., 3 : 4) |
Note: (i) Calculation of sacrifice ratio :
A’s sacrifices = 1/5 of his share = 1/5 of 3/5 = 3/25
B’s sacrifices = 2/5 of his share = 2/5 of 2/5 = 4/25
Sacrificing ratio between A and B i.e., 3/25 : 4/25 = 3 : 4
(Ii) Calculation of C’s share of profit :
C’s share of profit = 3/25 + 4/25 = 7/25
(ii) Calculation of C’s share profit :
Treatment of Existing Goodwill shown in the books
If goodwill already shown in the balance sheet, it should be written off by debiting old partners in their old profits sharing ratio.
9 : (Existing goodwill to be written off) : A and B are partners in a firm sharing profits and losses in the ratio of 3 : 2. They admit c into partnership for 1/5 share. C brings Rs. 30,000 as capital and Rs. 10,000 as goodwill. At the time o admission of C, goodwill appears in the balance sheet of A and B at Rs. 3,000. New Profit sharing ratio of partners shall be 5:3:2. Pass necessary entries.
Journal
| Date | Particulars | L.F. | Debit (Rs.) | Credit (Rs.) |
| | Bank A/c Dr. To Premium for Goodwill A/c To C’s Capital A/c (Being the amount of goodwill and capital brought in by new partner C) | 40,000 10,000 1,800 1,200 | 30,000 10,000 5,000 5,000 3,000 | |
| Premium for Goodwill A/c Dr. To A’s Capital A/c To B’s Capital A/c (Being the amount of goodwill distributed between A and B in their sacrificing ratio i.e., 1 : 1) | ||||
| A’s capital A/c Dr. B’s capital A/c Dr. To Goodwill A/c (Being existing goodwill written off between old partners in their old ratio i.e., 3 : 2) |
Notes : Sacrificing ratio = Old ratio – New ratio
A = 3/5 – 5/10 = 
B = 2/5 – 3/10 = 
Sacrificing ratio between A and B = 1 : 1 i.e., equal.
Case (ii) Premium brought in kind
10 : (premium brought in kind) : Anubhav and Babita are partners in a firm sharing profits and losses in the ratio of 3:2. On April 1, 2015 they admit Deepak as a new partner for 3/13 share in the profits. Deepak contributed the following assets towards his capital and for his share of goodwill.
Land Rs. 90,000, Machinery Rs. 70,000 stock Rs. 60,000 and debtors Rs. 40,000. On the date of admission of Deepak, the goodwill of the firm was valued at Rs. 5,20,000, which is not appear in the books. Record necessaries journal entries in the books of the firm. Show your calculation clearly.
Journal
| Date | Particulars | L.F. | Debit (Rs.) | Credit (Rs.) |
| 2015 April -1 | Land A/c Dr. Machinery A/c Dr. Stock A/c Dr. Debtors A/c Dr. To Premium for Goodwill A/c  To Deepak’s Capital A/c (Balancing figure) (Being the amount of goodwill and capital brought in kind by new partner) | 90,000 70,000 60,000 40,000 1,20,000 | 1,20,000 1,40,000 72,000 48,000 | |
| April – 1 | Premium for Goodwill A/c Dr. To Anubhav’s Capital A/c To Babita’s Capital A/c (Being the amount of goodwill distributed between Anubhav and Babita in their sacrificing ratio i.e., 3 : 2) |
Note : Here Sacrificing Ratio = Old Ratio i.e., 3 : 2
Case (iii) Amount of goodwill which was brought in by new partner, is withdrawn by old partner :
In this case one additional journal entry may be passed :
Old Partners’ Capital A/c Dr.
To Bank/Cash A/c
(Cash withdrawn by old partners)
Case (iv) when the new partner is unable to bring his share of goodwill in cash.
Sometimes the new partner does not bring his share of goodwill in cash. Then his share of goodwill is calculated and adusted by the following Journal entry.
New Parnters’ Capital Dr.
To old partners Capital A/cs
(in the sacrificing ratio)
11 : Neeta and Sumita are partners sharing profits and losses in the ratios of 2:1. They admit Geeta as a partner for 1/4th share. Geeta pays Rs. 50,000 as capital but does not bring any amount for goodwill. The goodwill of the new firm is valued at Rs. 36,000. Give Journal entries.
Solution :
Journal
| Date | Particulars | L.F. | Debit (Rs.) | Credit (Rs.) |
| 1. 2. | Cash A/c Dr. To Geeta’s Capital A/c (Being the amount of goodwill and capital brought in by new partner) | 50,000 9,000 | 50,000 6,000 3,000 | |
| Geeta’s Capital A/c Dr. To Neeta’s Capital A/c To Sunit’s Capital A/c (Being the amount of new Partner’s share of goodwill transferred to old Partner’s Capital A/c in their sacrificing ratio i.e., 3 : 4) |
Working Note :
(1) As nothing is given about sacrifice etc. except the old ratio and the new partners share of profit.
Sacrificing Ratio = Old Ration = 2 : 1
(2) Goodwill of the firm = Rs. 36,000
Geeta’s share of profit = 1/4
Geeta’s share of Goodwill = Rs. 36,000 = 1/4 Rs. 9,000
Case (v) Partly goodwill brought in by new partner :
12: (Partly premium brought in cash) : Sheetal and Raman share profits equally. They admit Chiku into partnership. Chiku pays only Rs. 1,000 for premium out of his share of premium of Rs. 1,800 for ¼ share of profit. Goodwill Account appears in the books at Rs. 6,000. All partners have decided that goodwill should not appear in the books of the new fir, Journalise.
Journal
| Date | Particulars | L.F. | Debit (Rs.) | Credit (Rs.) |
| | Bank A/c Dr. To Premium for Goodwill A/c (Being the amount of goodwill brought in cash by new partner) | 1,000 1,000 800 3,000 3,000 | 10,000 900 900 6,000 | |
| Premium for Goodwill A/c Dr. Chiku’s Capital A/s Dr. To sheetal’s Capital A/c To Raman’s Capital A/c (Being the amount of goodwill transferred to sacrificing partners in their sacrificing ratio i.e., 1 : 1) | ||||
| Seeta’s Capital A/c Dr. Raman’s Capital A/c Dr. To Goodwill A/c (Being existing goodwill written off between old partners in their old ratio i.e., equal) |
Case (vi) Gain made by an old partner :
13: (Sacrifice/Gain made by an old partner) : Ashok and Ravi were partners in a firm sharing profits and losses in the ratio of 7:3. They admitted Chander as a new partner. The new profit ratio between Ashok, Ravi and Chander will be 2:2:1. Chander brought Rs. 24,000 for his share of goodwill.
Pass necessary journal entries for the treatment of goodwill.
Solution:
Journal
| Date | Particulars | L.F. | Debit (Rs.) | Credit (Rs.) |
| | Bank A/c Dr. To Premium for Goodwill A/c (Being the amount of goodwill brought in by new partner) | 24,000 24,000 12,000 | 24,000 36,000 | |
| Premium for Goodwill A/c Dr. Ravi’s Capital A/c Dr. To Ashok’s Capital A/c (Being the goodwill credited to Ashok’s capital A/c) |
Not : Calculation of sacrifice/gain share of partners(s) :
Sacrificing ratio = Old ratio – New ratio
Ashok = 7/10 – 2/5 = 
Ravi = 3/10 – 2/5 = 
grain
Being negative result, it shows gain. Since Ravi is gaining equal to 1/10 in the profits, therefore, he will also compensate Ashok proportionately. For 1/5 share Chander brought Rs. 24,000, therefore, Ravi will compensate Ashok by Rs. 12,000 i.e., 
Case (vii) Hidden Goodwill
14 : A and B are partners with capitals of Rs. 26,000 and Rs. 22,000 respectively. They admit C as partner with 1/4th share in the profits of the firm. C’s brings Rs 26, 000 as his share of capital. Give journal entry to record goodwill on C’s admission.
Journal
| Date | Particulars | L.F. | Debit (Rs.) | Credit (Rs.) |
| | Bank A/c Dr. To C’s capital A/c (Being the amount of goodwill brought in by new partner) | 26,000 7,500 | 26,000 3,750 3,750 | |
| C’s Capital A/c Dr. To A’s Capital A/c To B’s Capital A/c (Being the goodwill credited to sacrificing partners’ capital a/cs in their sacrificing ratio i.e., equal) |
Note :
(1) Calculation of C’s share of goodwill :
Total capital of new firm no basis of C’s capital i.e., 
Total capital of A and B and C i.e., Rs. 26,000 + Rs. 22,000 + Rs. 26,000 = 74,000
Goodwill of the firm = total capital of new firm – combined capital = 1,04,000 – 74,000 = 30,000
Thus C’s share of goodwill = 
(2) In the absence of information, profits will be shared equally.
15 : Following is the Balance Sheet of Shashi and Ashu shari profit as 3 : 2.
| Particulars | (Rs.) | Assets | (Rs.) |
| Creditors General reserve Workmen’s compensation fund Capital : Shashi Ashu | 18,000 25,000 15,000 15,000 10,000 | Debtors 22,000 Less: Provision for DD 1,000 Land and Building Plant and machinery Stock Bank | 21,000 18,000 12,000 11,000 21,000 |
| 83,000 | 83,000 |
On admission of Tanya for 1/6 th share in the profit it was decided that :
(i) Provision for doubtful debts to be increased by Rs. 1,500.
(ii) Value of land and building to be increased to Rs. 21,000.
(iii) Value of stock to be increased by Rs. 2,500.
(iv) The liability of workmen’s compensation fund was determined to be Rs. 12,000.
(v) Tanya brought in as her share of goodwill Rs. 10,000 in cash.
(vi) Tanya was to bring further cash of Rs. 15,000 for her capital.
Prepare Revaluation A/c, Capital A/cs and the Balance Sheet of the new firm
Solution :
Revaluation Account
| Particulars | (Rs.) | Assets | (Rs.) |
| To Provision for D.D. To Capital A/cs : Shashi 3/5 2,400 Ashu 2/5 1,600 | 1,500 4,000 | By Land and Building A/c By Stock | 3,000 2,500 |
| 5,500 | 83,000 |
Partners’ Capital Account
| Particulars | Shashi | Ashu | Tanya | Particulars | Shashi | Ashu | Tanya |
| To Balance e/d | 40,200 | 26,800 | 15,000 | By balance b/d By general reserve By workmen’s compersation A/c By Revaluation A/c By Bank A/c By Premium for goodwill | 15,000 15,000 1,800 2,400 – 6,000 | 10,000 10,000 1,200 1,600 – 4,000 | – – – – 15,000 – |
| 40,200 | 26,800 | 15,000 | 40,2000 | 26,800 | 15,000 |
Balance Sheet of the New Firm
| Liabilities | (Rs.) | Assets | (Rs.) |
| Creditors Work compensation fund Capital : Shashi Ashu Tanya | 18,000 12,000 40,200 26,800 15,000 | Debtors 22,000 Less: Provision for DD 1,000 Land and Building Plant and machinery Stock Bank | 19,000 21,000 12,000 13,500 46,000 |
| 1,12,000 | 1,12,000 |
16 : A, B and C are partners sharing profits and the ratio of 2:3:5. On 31st March 2015, their Balance Sheet was as follows.
| Particulars | (Rs.) | Particulars | (Rs.) |
| Capital A 36,000 B 44,000 C 52,000 Creditors Bill payable Profit and Loss Account | 1,32,000 64,000 32,000 14,000 | Cash Bills receivable Furniture Stock Debtors Investments Machinery Goodwill | 18,000 24,000 28,000 44,000 42,000 32,000 34,000 20,000 |
| 2,42,000 | 2,42,000 |
They admit D int partnership on the following terms :
(i) Furniture and Machinery to be depreciated by 15%
(ii) Stock is revaluated at Rs. 48,000.
(iii) Goodwill to be valued at Rs. 24,000
(iv) Outstanding rent amount Rs. 1,800.
(v) Prepaid salaries Rs. 800.
(vi) D to being Rs. 32,000 towards his capital for 1/6 th share.
Prepare Revaluation Account, Partners Capital Accounts and Balance Sheet of the new firm.
Solution :
| Particulars | (Rs.) | Particulars | (Rs.) |
| To Fumiture A/c To Machinery A/c To Outstanding rent A/c | 4,200 5,100 1,800 | By Stock By Prepaid salaries A/c By Capital A/c (loss) : A 2/10 1,260 B 3/10 1,890 C 5/10 3,150 | 4,000 800 6,300 |
| 11,100 | 11,100 |
Partners’ Capital Account
Dr. Cr.
| Particulars | A(Rs.) | B(Rs.) | C(Rs.) | D(Rs.) | Particulars | A(Rs.) | B(Rs.) | C(Rs.) | D(Rs.) |
| To Revaluation A/c To Goodwill A/c To A’s capital To B’s capital To C’s capital To Balance c/d | 1,260 4,000 – – – 34,340 | 1,890 6,000 – – – 41,510 | 3,150 10,000 – – – 47,850 | – – 800 1,200 2,000 28,000 | By balance c/d By P/L A/c By D’s capital A/c By Cash A/c | 36,000 2,800 800 – | 44,000 4,200 1,200 – | 52,000 7,000 2,000 | 32,000 |
| 39,600 | 49,400 | 61,000 | 32,000 | 39,600 | 49,400 | 61,000 | 32,000 |
Balance Sheet of the New Firm
| Liabilities | (Rs.) | Assets | (Rs.) |
| Creditors Capital A 34,340 B 41,510 C 47,850 D 28,000 Creditors Bills Payable Outstanding rent | 18,000 1,51,700 64,000 32,000 1,800 | Cash Bill Receivable Furniture Stock Debtors Investment Machinery Prepaid salaries | 50,000 24,000 23,000 48,000 42,000 32,000 28,900 800 |
| 2,49,500 | 2,49,500 |
17 : A, B and C are partners sharing profits and losses in the ratio of 5:3:2. On 31st, March 2015 their Balance sheet was as follows :
| Liabilities | (Rs.) | Assets | (Rs.) |
| Capital A 36,000 B 44,000 C 52,000 Creditors Bills Payable General Reserve | 1,32,000 64,000 32,000 14,000 | Cash Bill Receivable Stock Debtors Machinery Goodwill | 18,000 14,000 44,000 42,000 94,000 20,000 |
| 2,32,000 | 2,32,000 |
They decided to admit D into the partnership on the following terms :
(i) Machinery is to be depreciated by 15%.
(ii) Stock is to be revalued at Rs. 48,000.
(iii) Outstanding rent is Rs. 1,900.
(iv) D is to bring Rs. 6,000 as goodwill and sufficient capital for a 2/5th share in the capitals of firm.
Prepare Revaluation A/c, Partner’s Capital A/cs, Cash A/c and Balance Sheet of the new firm.
Solution :
Revaluation Account
Dr. Cr.
| Particulars | (Rs.) | Particulars | (Rs.) |
| To Machinery A/c To Outstanding rent A/c | 4,200 5,100 1,800 | By Stock By Capital A/c (loss) : A 5/10 6,000 B 3/10z 3,600 C 2/10 2,400 | 4,000 12,000 |
| 16,000 | 16,000 |
Partners’ Capital Account
| Particulars | A(Rs.) | B(Rs.) | C(Rs.) | D(Rs.) | Particulars | A(Rs.) | B(Rs.) | C(Rs.) | D(Rs.) |
| To Goodwill A/c To Revaluation A/c To Balance c/d | 10,000 6,000 30,000 | 6,000 3,600 40,400 | 4,000 2,400 49,600 | – – 80,000 | By balance b/d By General reserve By Premium By Cash A/c By balance b/d | 36,000 7,000 3,000 – | 44,000 4,200 3,800 – | 52,000 2,800 1,200 – | 80,000 |
| 46,000 | 50,000 | 56,000 | 80,000 | 46,000 | 50,000 | 56,000 | 80,000 | ||
| 30,000 | 40,400 | 49,600 | 80,000 |
Note : Combined capital of A, B and C for 3/5 (1-2/5) = Rs. 1,20,000
Thus total capital of the firm = 
D’s share of capital =
| Liabilities | (Rs.) | Assets | (Rs.) |
| Creditors Bill payable Outstanding rent Capital : A 30,000 B 40,400 C 49,600 D 80,000 | 64,000 22,000 1,900 2,00,000 | Cash Bill Receivable Stock Debtors Machinery | 1,04,000 14,000 48,000 42,000 79,000 |
| 2,87,900 | 2,87,900 |
18 : Following is the Balance Sheet of A, B and C sharing profits and losses in the ratio of 6:5:3 respectively.
| Liabilities | (Rs.) | Assets | (Rs.) |
| Creditors Bill payable General reserve A’s capital B’s capital C’s capital | 37,000 12,600 21,000 70,000 59,800 29,100 | Cash Debtors Stock Furniture Land and Building Goodwill | 3,700 52,920 58,800 14,700 90,300 10,500 |
| 2,31,000 | 2,31,000 |
They agreed to be take D into partnership giving 1/8th share in profits on the following terms:
(a) Furniture to be depreciated by Rs. 1,840 and Stock by 10%
(b) A provision of Rs. 2,640 to be made for an outstanding bill for repairs.
(c) That land and building be brought up to Rs. 1,19,700.
(d) That the goodwill is valued at Rs. 28,140.
(e) That D should bring in Rs. 35,400 as his capital and for his share of goodwill.
(f) After making the above adjustments the capital of old partners be adjusted in proportion to D’s Capital by bringing in cash or excess to be paid off.
Prepare Revaluation Account, Capital Account of Partners and Balance Sheet of new firm.
Solution :
Revaluation Account
| Particulars | (Rs.) | Particulars | (Rs.) |
| To Furniture A/c To Stock A/c To Outstanding rent A/c To capital A/cs : A 6/4 8,160 B 5/14 6,800 C 3/14 4,080 | 1,840 5,880 2,640 19,040 | By Land and Building A/c | 29,400 |
| 29,400 | 29,400 |
Partners’ Capital Account
| Particulars | A(Rs.) | B(Rs.) | C(Rs.) | D(Rs.) | Particulars | A(Rs.) | B(Rs.) | C(Rs.) | D(Rs.) |
| To Goodwill A/c To Balance c/d | 4,500 95,646 | 3,750 79,705 | 2,250 47,823 | – 31,882 | By balance b/d By General reserve By revaluation A/c By Premium for goodwill A/c By Cash A/c Balance b/d | 70,800 9,000 8,160 ]1,508 10,678 | 59,700 7,500 6,800 1,256 8,199 | 29,100 4,500 4,080 754 11,639 | 31,882 |
| 1,00,146 | 81,455 | 50,073 | 35,400 | 100,146 | 83,455 | 50,073 | 35,400 | ||
| 95,646 | 79,705 | 47,823 | 31,882 |
Balance Sheet of the New Firm
| Liabilities | (Rs.) | Assets | (Rs.) |
| Creditors Bills Payable Outstanding repairs Capital A 95,646 B 79,705 C 47,823 D 31,882 | 37,800 12,600 2,640 2,55,056 | Cash Debtors Stock Furniture Land Building | 69,696 52,920 52,920 12,860 1,19,700 |
| 3,08,096 | 3,08,096 |
Note : Calculation of New Profit Sharing Ratio :
1. Share given to D = 1/8, Balance of profit = 1 – 1/8 = 7/8
Hence, A’s Share = 
B’s Share =
C’s Share = 
A : B : C : D
New Ratio : 41/112 : 35/112 : 21/112 : 1/8 = 42 : 35 : 21 : 14/112 or 6 : 5 : 3 : 2
Capital of D = Rs 35,400 – 35/8 = Rs. 31,882
Total capital of Firm = Rs. 
Capital of A = Rs. 
Capital of B = Rs. 
Capital of C = Rs. 
2. Calculation of new capital of A, B, and C based on D’s Capital for 1/8 share is Rs. 31,882. Thus
Capital of whole firm = 
Therefore As Capital = 
B’s Capital = 
C’s Capital = 
19 : A and B are parents in a firm sharing profits and losses in the ratio of 3:2. Their balance sheet was as follows on 1st January, 2015 :
| Liabilities | (Rs.) | Assets | (Rs.) |
| Sundry Creditors Capital A 30,000 B 25,000 General reserve | 15,000 55,000 10,000 | Plant Patents Stock Debtors Bank | 30,000 10,000 20,000 18,000 2,000 |
| 80,000 | 80,000 |
C is admitted as a partner on the above date on the following terms :
(i) He will pay Rs. 10,000 as goodwill for one-fourth share in the profit of the firm.
(ii) The assets are to be valued as under :
Plant at Rs. 32,000; Stock at Rs. 18,000; Debtors at book figure a provision of 5 percent for bad debts.
(iii) It was found that the creditors included a sum of Rs. 1,400 which was not be paid. But it was also, found that there was a liability for compensation to workers amount in to Rs. 2,000.
(iv) C was to introduce Rs, 20,000 as capital and the capitals of other partners were to be adjusted in the new profit sharing ratio for this purpose, current accounts were to be opened.
Prepare Revaluation Account, Capital Account and Balance Sheet after C’s admission.
Solution : A’s share = 
B’s share = 
C’s share (given) = 1/4
A : B : C
(2) New capital of A and B : Based on C’s capital, the total capital f the firm will work out i.e.,
C’s capital for 1/4th share = 20,000
Thus the capital of whole firm = 
Therefore, based on their new profit new profit sharing ratio, the capital of A and B will be.
A’s share of capital = 
B’s share of capital = 
Solution:
Revaluation Account
| Particulars | (Rs.) | Particulars | (Rs.) |
| To Stock A/c To provision for Doubtful Debts A/c To Outstanding liability A/c | 2,000 900 2,000 | By Plant A/c By Creditors A/c By Capital A/c (loss) : A 3/5 900 B 2/5 600 | 2,000 1,400 1,500 |
| 4,900 | 4,900 |
Capital Account
| Particulars | A (Rs.) | B (Rs.) | C (Rs.) | Particulars | A(Rs.) | B (Rs.) | C (Rs.) |
| To Revaluation A/c To Balance e/d To Current A/c To Balance c/d | 900 41,100 | 600 32,400 | 20,000 | By balance b/d By general reserve By Bank A/c By Premium By balance b/d | 30,000 6,000 – 6,000 | 25,000 4,000 – 4,000 | – – 20,000 – |
| 42,000 | 33,000 | 20,000 | 42,000 | 33,000 | 20,000 | ||
| 5,100 36,000 | 8,400 24,000 | – 20,000 | 41,100 | 32,400 | 20,000 | ||
| 41,000 | 32,400 | 20,000 | |||||
| 41,100 | 32,400 | 20,000 |
Partner’s Current Account
| Particulars | A (Rs.) | B (Rs.) | C (Rs.) | Particulars | A(Rs.) | B (Rs.) | C (Rs.) |
| To balance c/d | 5,100 | 8,400 | – | By Capital A/c | 5,100 | 8,400 | – |
Balance Sheet
(after C/s admission) As on 1st Jan, 2015
| Liabilities | (Rs.) | Assets | (Rs.) |
| Sundry Creditors Outstanding liability Capital A/cs : A 36,000 B 24,000 C 20,000 Current A/cs : R A 5,100 B – 8,400 | 13,600 2,000 80,000 13,500 | Plant Patents Stock Debtors 18,000 Less : Provision for D. D. (900) Bank | 32,000 10,000 18,000 17,000 32,000 |
| 1,09,100 | 1,09,100 |
Note : (1) Calculation of new profit sharing ratio
Share given to C = 1/4; Balance of Profit = 1 – 1/4 = 3/4
Adjustment of capital on basis of old partners’ calculation of proportionate capital of New Partners’.
20 : Sahaj & Nimish are partners in a firm. They share profits & losses in ratio of 2:1 . Since both of them are specially abled sometimes they find it difficult to run a business so admitted Gauri a common friend decided to help them ‘Therefore, they admitted her into partnership for 1/3 share. She brought her share of goodwill in cash & proportionate capital. At the time her admission Balance Sheet of Sahaj & Nimish was as under.
| Liabilities | (Rs.) | Assets | (Rs.) |
| Capital A/c Sahay 1,20,0000 Nimish 80,000 General Reserve Creditors Employees Provident Fund | 2,00,000 30,000 30,000 40,000 | Machinery Furniture Stock Sundry Debtors Cash | 1,20,000 80,000 50,000 30,000 20,000 |
| 3,00,000 | 3,00,000 |
It was decided to :
(a) Reduce the value of stock by Rs. 5,000
(b) Depreciate furniture by 10% and appreciate machinery by 5%.
(c) Rs. 3,000 of the debtors proved bad. A provision of 5% was to be created on Sundry Debtors for doubtful debts.
(d) Goodwill of the firm was valued at Rs. 45,000
Prepare Revaluation Account, Partner’s Capital Accounts and Balance Sheet of reconstituted firm. Identify the values conveyed.
Solution :
Revaluation Account
| Particulars | (Rs.) | Particulars | (Rs.) |
| To Stock A/c To Furniture To Sundry Debtors To provision for bad debts  | 5,000 8,000 3,000 1350 | By Machinery A/c By Loss transferred to Sahay’s capital A/c 7,567 Nimish’s capital A/c 5783 | 6,000 11,350 |
| 17,350 | 17,350 |
Partner’s capital Account
| Particulars | (Rs.) Sahay | (Rs.) Nimish | (Rs.) Gauri | Particulars | (Rs.) Sahay | (Rs.) Nimish | (Rs.) Gauri |
| To Revaluation A/c To balance c/d | 7,567 1,42,433 | 3783 91,217 | – 1,16825 | By Capital A/c By General Reserve By Premium A/c By Bank A/c | 1,20,000 20,000 10,000 | 80,000 10,000 5,000 | – – 1,16,825 |
| 1,50,000 | 95,000 | 1,16825 | 1,50,000 | 95,000 | 1,16825 |
Balance Sheet of New Firm
| Liabilities | (Rs.) | Assets | (Rs.) |
| Capital A/c Sahay 1,42,000 Nimish 91,217 Gauri 1,16,825 Creditors Employees provident Fund | 3,50,475 30,000 40,000 | Machinery Furniture Stock Sundry Debtors 30,000 Less : Bad debts 3,000 Less : Provision 1,350 Cash Bank | 1,26,000 72,000 45,000 25,650 20,000 1,31,825 |
| 4,20,475 | 4,20,475 |
Values conveyed : Friendship, Sympathy.
21 : Anthony and Boni were partners in a firm sharing profit in ratio o 5 : 3. There Balance sheet as on 31-3-2015 was as follows:
| Liabilities | (Rs.) | Assets | (Rs.) |
| Bank overdraft Creditors General reserve Capital Accounts: Anothony 1,50,000 Boni 1,00,000 | 60,000 50,000 48,000 2,50,000 | Cash Debtors 100,000 Less: Provision 2,000 Bills Receivables Stock Building Land | 20,000 98,000 38,000 40,000 1,50,000 62,000 |
| 4,08,000 | 4,08,000 |
On 01.04.2015, they admitted Heena into partnership for 1/4th share in full profits of the firm. Assets and liabilities were revealed. Goodwill of the firm valued at Rs. 80,000.
Fill in the missing information/figure in the following ledger accounts and B ance Sheet.
Revaluation Account
| Particulars | (Rs.) | Particulars | (Rs.) |
| To provision for bad debts A/c To Stock A/c To Profit transferred to ____________ ____________ | 3,000 2,000 – | By Land A/c | |
Partner’s Capital Account
| Particulars | Anthony | Boni | Heena | Particulars | Anthony | Boni | Heena |
| To balance c/d | – | – | 80,000 | By Balance A/c By Gen. Reserve By Rev. A/c By Premium A/c for Goodwill By ………. | – – – – – | – – – – – | – – – – – |
Balance Sheet
As at 01.04.2015
| Liabilities | (Rs.) | Assets | (Rs.) |
| Bank Overdraft Creditors Capital A/c Anthony – Boni – Heena 80,000 | 60,000 50,000 – | Cash Debtors Bill Receivable Stock Building Land | – – 38,000 – 1,50,000 68,200 |
| – | – |
Solution :
Revaluation Account
| Particulars | (Rs.) | Particulars | (Rs.) |
| To provision for bad debts A/c To Stock A/c To Profit transferred to Anthony’s Capital A/c 750 Bonis Capital A/c 450 | 3,000 2,000 1,200 | By Land A/c | 6,200 |
| 6,200 | 6,200 |
Revaluation Account
| Particulars | Anthony | Boni | Heena | Particulars | Anthony | Boni | Heena |
| To balance c/d | 193,250 | 1,25,950 | 80,000 | By Balance A/c By Gen. Reserve By Rev. A/c By Premium A/c for Goodwill By Cash A/c | 1,50,000 30,000 750 12,500 – | 1,00,000 18,000 450 7,500 – | – – – – 80,000 |
| 1,93,250 | 1,25,950 | 80,000 | 1,93,250 | 1,25,950 | 80,000 |
Balance Sheet
As at 01.04.2015
| Liabilities | (Rs.) | Assets | (Rs.) |
| Bank Overdraft Creditors Capital A/cs Anthony 1,93,250 Boni 1,25,950 Heena 80,000 | 60,000 50,000 3,99,200 | Cash Debtors 1,00,000 Less: Provision 5,000 Bill Receivable Stock Building Land | 1,20,000 95,000 38,000 38,000 1,50,000 68,200 |
| 5,09,200 | 5,09,200 |