# Balbharati solutions for Book-keeping and Accountancy 12th Standard HSC Maharashtra State Board chapter 3 - Reconstitution of Partnership (Admission of Partner) [Latest edition]

## Chapter 3: Reconstitution of Partnership (Admission of Partner)

Exercise 3 (Objective Type Questions)Exercise 3 (Practical Problems)
Exercise 3 (Objective Type Questions) [Pages 159 - 160]

### Balbharati solutions for Book-keeping and Accountancy 12th Standard HSC Maharashtra State Board Chapter 3 Reconstitution of Partnership (Admission of Partner) Exercise 3 (Objective Type Questions) [Pages 159 - 160]

#### Select appropriate alternatives from those given below and rewrite the sentence.

Exercise 3 (Objective Type Questions) | Q 1. (A) 1. | Page 159

Anuj and Eeshan are two partners sharing profits and losses in the ratio of 3:2. They decided to admit Aaroh for 1/5th share, the new profit sharing ratio will be ____________

• 12:8:5

• 4:3:1

• 12: 8:1

• 12: 3:1

Exercise 3 (Objective Type Questions) | Q 1. (A) 2. | Page 159

Excess of proportionate capital over actual capital represents _________.

• Equal capital

• Surplus Capital

• Deficit Capital

• Gain

Exercise 3 (Objective Type Questions) | Q 1. (A) 3. | Page 159

__________ is credited when an unrecorded asset is brought into the business.

• Revaluation Account

• Balance Sheet

• Partners capital Account

Exercise 3 (Objective Type Questions) | Q 1. (A) 4. | Page 159

When goodwill is withdrawn by the partner ________ account is credited.

• Revaluation

• Cash/Bank

• Current

Exercise 3 (Objective Type Questions) | Q 1. (A) 5. | Page 159

If the asset is taken over by the partner _________ account is debited.

• Revaluation

• Capital

• Asset

• Balance Sheet

Exercise 3 (Objective Type Questions) | Q 1. (B) 1. | Page 159

Write a word/phrase/term which can substitute the following statement.

Method under which calculation of goodwill is done on the basis of extra profit earned above the normal profit.

Exercise 3 (Objective Type Questions) | Q 1. (B) 2. | Page 159

Write a word/phrase/term which can substitute the following statement.

An account opened to adjust the value of assets and liabilities at the time of admission of a partner.

Exercise 3 (Objective Type Questions) | Q 1. (B) 3. | Page 159

Write a word/phrase/term which can substitute the following statement.

Reputation of business measured in terms of money.

Exercise 3 (Objective Type Questions) | Q 1. (B) 4. | Page 159

Write a word/phrase/term which can substitute the following statement.

The ratio in which general reserve is distributed to the old partners.

Exercise 3 (Objective Type Questions) | Q 1. (B) 5. | Page 159

Write a word/phrase/term which can substitute the following statement.

Name the method of the treatment of goodwill where new partner will bring his share of goodwill in cash.

Exercise 3 (Objective Type Questions) | Q 1. (B) 6. | Page 159

Write a word/phrase/term which can substitute the following statement.

The proportion in which old partners make a sacrifice.

Exercise 3 (Objective Type Questions) | Q 1. (B) 7. | Page 159

Write a word/phrase/term which can substitute the following statement.

Capital employed × NRR/100 =

Exercise 3 (Objective Type Questions) | Q 1. (B) 8. | Page 159

Write a word/phrase/term which can substitute the following statement.

An account that is debited when the partner takes over the asset.

Exercise 3 (Objective Type Questions) | Q 1. (B) 9. | Page 159

Write a word/phrase/term which can substitute the following statement.

Profit and Loss Account balance appearing on the liability side of the Balance Sheet.

Exercise 3 (Objective Type Questions) | Q 1. (B) 10. | Page 159

Write a word/phrase/term which can substitute the following statement.

Old ratio - New ratio =

Exercise 3 (Objective Type Questions) | Q 1. (C) 1. | Page 159

State True or False with reason.

A new partner can bring capital in cash or kind.

• True

• False

Exercise 3 (Objective Type Questions) | Q 1. (C) 2. | Page 159

State True or False with reason.

When goodwill is paid privately to the partners, it is not recorded in the books.

• True

• False

Exercise 3 (Objective Type Questions) | Q 1. (C) 3. | Page 159

State True or False with reason.

The gain ratio is calculated at the time of admission of a partner.

• True

• False

Exercise 3 (Objective Type Questions) | Q 1. (C) 4. | Page 159

State True or False with reason.

Revaluation profit is distributed among all partners including new partner.

• True

• False

Exercise 3 (Objective Type Questions) | Q 1. (C) 5. | Page 159

State True or False with reason.

Change in the relationship between the partners is called the Reconstitution of partnership.

• True

• False

Exercise 3 (Objective Type Questions) | Q 1. (C) 6. | Page 159

State True or False with reason.

A new partner always bring his share of goodwill in cash.

• True

• False

Exercise 3 (Objective Type Questions) | Q 1. (C) 7. | Page 159

State True or False with reason.

When goodwill is written off, goodwill amount is debited.

• True

• False

Exercise 3 (Objective Type Questions) | Q 1. (C) 8. | Page 160

State True or False with reason.

The new ratio minus old ratio is equal to the sacrifice ratio.

• True

• False

Exercise 3 (Objective Type Questions) | Q 1. (C) 9. | Page 160

State True or False with reason.

Usually, when a new partner is admitted to the firm there will be an increase in the capital of the firm.

• True

• False

Exercise 3 (Objective Type Questions) | Q 1. (C) 10. | Page 160

State True or False with reason.

Cash/ Bank Account is credited when goodwill is withdrawn by the old partners.

• True

• False

Exercise 3 (Objective Type Questions) | Q 1. (D) 1. | Page 160

Find the Odd one.

• General reserve

• Creditors

• Machinery

• Capital

Exercise 3 (Objective Type Questions) | Q 1. (D) 2. | Page 160

Find the Odd one.

• The decrease in Furniture

• Patents written off

• Increase in Bills Payable

• RDD written off

Exercise 3 (Objective Type Questions) | Q 1. (D) 3. | Page 160

Find the Odd one.

• Super profit method

• Valuation method

• Average profit method

• Fluctuating capital method

#### Calculate the following.

Exercise 3 (Objective Type Questions) | Q 1. (E) 1. | Page 160

A and B are partners in a firm sharing profits and losses in the ratio of 1:1. C is admitted. A surrenders 1/4th share and B surrenders 1/5th of his share in favor of C. Calculate the new profit sharing ratio.

Exercise 3 (Objective Type Questions) | Q 1. (E) 2. | Page 160

Anika and Radhika are partners sharing profits in the ratio of 5:1. They decide to admit Sanika in the firm for 1/5th share. calculate the sacrifice ratio of Anika and Radhika

Exercise 3 (Objective Type Questions) | Q 1. (E) 3. | Page 160

Pramod and Vinod are partners sharing profits and losses in the ratio of 3:2. After the admission of Ramesh the new ratio of Pramod, Vinod and Ramesh is 4:3:2. Find out the sacrifice ratio.

Exercise 3 (Objective Type Questions) | Q 1. (F) 1. | Page 160

What is revaluation account?

Exercise 3 (Objective Type Questions) | Q 1. (F) 2. | Page 160

What is meant by the Reconstitution of Partnership?

Exercise 3 (Objective Type Questions) | Q 1. (F) 3. | Page 160

Why is a new partner admitted?

Exercise 3 (Objective Type Questions) | Q 1. (F) 4. | Page 160

What is the sacrifice ratio?

Exercise 3 (Objective Type Questions) | Q 1. (F) 5. | Page 160

What do you mean by raising the goodwill at the time of admission of a new partner?

Exercise 3 (Objective Type Questions) | Q 1. (F) 6. | Page 160

What is the super profit method of calculation of goodwill?

Exercise 3 (Objective Type Questions) | Q 1. (F) 7. | Page 160

When is the ratio of sacrifice calculated for the distribution of goodwill?

Exercise 3 (Objective Type Questions) | Q 1. (F) 8. | Page 160

What is the treatment of accumulated profits at the time of admission of a partner?

Exercise 3 (Objective Type Questions) | Q 1. (F) 9. | Page 160

State the ratio in which the old partner’s Capital A/c will be credited for goodwill when the new partner does not bring his share of goodwill in cash?

Exercise 3 (Objective Type Questions) | Q 1. (F) 10. | Page 160

What does the excess of debit over credits in the Profit and Loss Adjustment Account indicate?

#### Complete the table.

Exercise 3 (Objective Type Questions) | Q 1. (G) 1. | Page 160

_____________ ="Total profit"/"Number of years"

Exercise 3 (Objective Type Questions) | Q 1. (G) 2. | Page 160

Normal Profit =__________ xx" NRR"/ 100

Exercise 3 (Objective Type Questions) | Q 1. (G) 3. | Page 160

The stock showed in Balance Sheet → Stock undervalued by 20% → Cost of Stock

₹1,60,000  → __________→ __________

Exercise 3 (Practical Problems) [Pages 161 - 167]

### Balbharati solutions for Book-keeping and Accountancy 12th Standard HSC Maharashtra State Board Chapter 3 Reconstitution of Partnership (Admission of Partner) Exercise 3 (Practical Problems) [Pages 161 - 167]

Exercise 3 (Practical Problems) | Q 1. | Page 161

Vikram and Pradnya share profits and losses in the ratio 2:3 respectively. Their balance sheet as on 31st March 2018 was as under.

Balance Sheet as on 31st March 2018

 Liabilities Amount (₹) Assets Amount (₹) Creditors 1,05,000 Cash 7,500 Capitals : Land & Building 37,500 Vikram 75,000 Plant 45,000 Pradnya 75,000 Furniture 3,000 Stock 75,000 Debtors 87,000 2,55,000 2,55,000

They agreed to admit Avani as a partner on 1st April 2018 on the following terms:

1 Avani shall have 1/4th share in future profits.

2. He shall bring ₹ 37,500 as his capital and ₹ 30,000 as his share of goodwill.

3. Land and building to be valued at ₹ 45,000 and furniture to be depreciated by 10%.

4. Provision for bad and doubtful debts is to be maintained at 5% on the Sundry Debtors.

5 Stocks to be valued ₹ 82, 500.

The capital A/c of all partners to be adjusted in their new profit and loss ratio and excess amount be transferred to their loan accounts.

Prepare Profit and Loss Adjustment Account, Capital Accounts, and New Balance Sheet.

Exercise 3 (Practical Problems) | Q 2. | Page 161

Amalendu and Sameer share profits and losses in the ratio 3:2 respectively Their balance sheet as on 31st March 2017 was as under.

Balance Sheet as on 31st March 2017

 Liabilities Amount (₹) Assets Amount (₹) Sundry Creditors 10,000 Cash at bank 12,000 Amlendu capital 60,000 Sundry debtors 24,000 Sameer capital 40,000 Land & Building 50,000 General reserve 20,000 Stock 16,000 Plant and machinery 20,000 Furniture & fixture 8,000 1,30,000 1,30,000

On 1st April 2017, they admit Paresh into partnership. The term being that:

1 He shall pay ₹16,000 as his share of Goodwill 50% amount of Goodwill shall be withdrawn by the old partners.

2 He shall have to bring in ₹20,000 as his Capital for 1/4 share in future profits.

3. For the purpose of Paresh’s admission, it was agreed that the assets would be revalued as follows.

A) Land and Building is to be valued at ₹60,000

B) Plant and Machinery to be valued at ₹16,000

C) Stock valued at ₹20,000 and Furniture and Fixtures at ₹4,000

D) A Provision of 5% on Debtors would be made for Doubtful Debts.

Pass The necessary Journal Entries in the Books of a New Firm.

Exercise 3 (Practical Problems) | Q 3. | Page 162

Vasu and Viraj Share Profits and Losses in the Ratio of 3:2 respectively Their Balance Sheet as on 31st March 2019 was as under

Balance Sheet as on 31st March, 2019

 Liabilities Amount (₹) Assets Amount (₹) Sundry Creditors 45,000 Cash at bank 750 General Reserve 30,000 Sundry debtors 66,750 Capital: Stock 25,500 Vasu 1,08,000 Viraj 72,000 Investment 36,000 Plant 90,000 Building 36,000 2,55,000 2,55,000

They admit Hari into Partnership on 1.4. 2019 the terms being that :

1  He shall have to bring in ₹60,000 as his Capital for 1/4 share in future profits

2 Value of Goodwill of the Firm is to be fixed at The average profits for the last three years. The Profit was.

2009-10  ₹ 48,000,

2010-11 ₹ 81,000

2011-12 ₹ 73,500

Hari is unable to bring the value of the Goodwill in cash. It is decided to raise the Goodwill in the books of accounts.

3. Reserve for Doubtful Debts is to be created at ₹ 1,500.

4. Closing Stock is valued at ₹ 22,500

5. Plant and Building is to be depreciated by 5%

Prepare Profit and Loss Adjustment A/c, Capital Accounts of Partners, And Balance Sheet of the New Firm.

Exercise 3 (Practical Problems) | Q 4. | Page 163

Mr. Deep & Mr. Karan were in Partnership sharing Profits & Losses in the proportion of 3: 1 respectively. Their Balance Sheet On 31st March 2018 Stood as follows.

 Balance Sheet as on 31st March Liabilities Amount (₹) Amount (₹) Assets Amount (₹) Amount (₹) Sundry Creditors 40,000 Cash 40,000 Bill Payable 10,000 Sundry debtors 32,000 Bank Overdraft 11,000 Land & Building 16,000 Capital A/c: Stock 20,000 Deep 60,000 Karan 20,000 80,000 General Reserve 8,000 Plant and machinery 30,000 Furniture 11,000 1,49,000 1,49,000

They admit Shubham into Partnership on 1 April 2018 The term being that:

1. He shall have to bring in ₹ 20,000 as his capital for 1/5 Share in future profits & 10,000 as his share of Goodwill.

2. A Provision for 5% doubtful debts to be created on Sundry Debtors.

3. Furniture to be depreciated by 20%

4. Stock should be appreciated by 5% and Building be appreciated by 20%

5. Capital A/c of all partners be adjusted in their new profit sharing ratio through a cash account.

Prepare Profit and Loss Adjustment A/c, Partner’s Capital A/c, Balance sheet of the new firm.

Exercise 3 (Practical Problems) | Q 5. | Page 163

Mr. Kishor & Mr. Lal were in partnership sharing profits & losses in the proportion of 3/4 and 1/4 respectively.

 Balance Sheet as on 31 March 2018 Liabilities Amt ₹ Amt ₹ Assets Amt ₹ Amt ₹ Creditors 1,20,000 Land and Building 75,000 General Reserve 12,000 Furniture 6,000 Capital A/c: Stock 60,000 Kishor 90,000 Lal 48,000 1,38,000 Debtors 60,000 Bills Receivable 39,000 Cash at Bank 30,000 2,70,000 2,70,000

They decided to admit Ram on 1 April 2018 on following terms:

1. He should be given 1/5th share in profit and for that he brought in ₹ 60,000 as capital through RTGS.

2. Goodwill should be raised at ₹ 60,000

3. Appreciate Land and Building by 20%

4. Furniture and Stock are to be depreciated by 10%

5. The Capitals of all partners should be adjusted in their new profit sharing ratio through Bank A/c.

Pass necessary Journal Entries in the books of the Partnership firm and a Balance sheet of the new firm.

Exercise 3 (Practical Problems) | Q 6. | Page 164

Vrushali and Leena are equal partners in the business. Their Balance sheet as on 31 March 2018 stood as under.

 Balance Sheet as on 31 March 2018 Liabilities Amt. (₹) Amt. (₹) Assets Amt. (₹) Amt. (₹) Sundry Creditors 90,000 90,000 Cash in Bank 62,000 Capitals: Debtors 31,000 Vrushali 45,000 75,000 Less: R.D.D 1,000 30,000 Leena 30,000 Building 55,000 General Reserves 18,000 Machinery 24,000 Bills Receivable 12,000 1,83,000 1,83,000

They decided to admit Aparna on 1st April 2018 on the following terms:

1. The Machinery and Building be depreciated by 10%. Reserve for Doubtful Debts to be increased by ₹ 5,000

2. Bills Receivable are taken over by Vrushali at the discount of 10%

3. Aparna should bring Rs. 60,000 as capital for her 1/4th share in future profits.

4. The capital accounts of all the partners be adjusted in proportion in the new profit sharing ratio by opening current accounts of the partners.

Prepare Profit and Loss Adjustment A/c, Partner’s Capital A/c, Balance sheet of the new firm.

Exercise 3 (Practical Problems) | Q 7. | Page 164

The balance sheet of Medha and Radha who share profit and loss in the ratio 3: 1 is as follows:

 Balance Sheet as on 31 March 2018 Liabilities Amount (₹) Assets Amount (₹) Sundry Creditors 80,000 Cash 78,000 Bills Payable 20,000 Sundry debtors 64,000 Bank overdraft 20,000 Stock 40,000 Capital A/c: Plant & Machinery 60,000 Medha 1,20,000 Furniture 22,000 Radha 40,000 Land and Building 32,000 General reserve 16,000 2,96,000 2,96,000

They decided to admit krutika on 1st April 2018 on the following terms:

1. Krutika is taken as partner on 1st April 2017 she will pay 40,000 as her capital for 1/5 share in future profits and Rs. 2,500 as goodwill

2. A 5% provision for bad and doubtful debt be created on debtors.

3. Furniture be depreciated by 20%.

4. Stocks be appreciated by 5% and plant & machinery by 20%

5. The Capital accounts of all partners be adjusted in their new profit sharing ratio by adjusting the amount through loan.

6. The new profit sharing ratio will be 3/5 1/5 1/5 respectively.

You are required to prepare profit and loss adjustment A/c, Partner’s Capital A/c, Balance Sheet of the new firm.

Exercise 3 (Practical Problems) | Q 8. | Page 165

The Balance Sheet of Sahil and Nikhil who share profits in the ratio of 3: 2 as on 31st March 2017

 Balance Sheet as on 31st March 2017 Liabilities Amt. (₹) Amt. (₹) Assets Amt. (₹) Amt. (₹) Creditors 60,000 Furniture 60,000 capitals: Building 72,000 Sahil 80,000 Debtors 40,000 Nikhil 1,00,000 1,80,000 Closing Stock 48,000 Cash in Hand 20,000 2,40,000 2,40,000

1. Varad was to pay 1,00,000 for his share of capital.

2. He was also to pay 40,000 as his share of goodwill.

3. The new profit sharing ratio was 3:2:3

4. Old partners decided to revalue the assets as follows:

Building 1,00,000, Furniture- 48,000, Debtors - 38,000 (in view of likely bad debts)

5. It was found that there was a liability for 3,000 for goods in March 2017 but recorded on 2nd April 2017.

You are required to prepare:

a) Profit and Loss adjustment accounts

b) Capital accounts of the partners

Exercise 3 (Practical Problems) | Q 9. | Page 166

Mr. Amit and Baban share profits and losses in the ratio 2:3 respectively. Their balance sheet as on 31st March 2018 was as under

 Balance Sheet as On 31st March 2018 Liabilities Amount (₹) Assets Amount (₹) Creditors 1,40,000 Cash 110,000 Capital: Land and Building 50,000 Amit 100,000 Plant 60,000 Baban 100,000 Furniture 4,000 Stock 100,000 Debtors 16,000 3,40,000 3,40,000

They agreed decided to admit Kamal on 1st April 2018 on the following terms:

1. Kamal shall have 1/4th share in future profits.

2. They agreed to admit Kamal as a partner on 1st April 2018 on the following terms:

3. She shall bring 50,000 as her capital and 40,000 as her share of goodwill.

4. Land and building to be valued at 60,000 and furniture to be depreciated by 10%

5. Provision for bad and doubtful debts is to be maintained at 5% on the sundry debtors.

6. Stocks to be valued 1,10,000 The capital A/c of all partners to be adjusted in their new profit and loss ratio and excess amount be transferred to their loan accounts.

Prepare profit and loss adjustment A/c, Capital A/cs, and New Balance Sheet.

Exercise 3 (Practical Problems) | Q 10. | Page 167

The following is the Balance Sheet of Om and Jay on 31st March 2018, they share profits and losses in the ratio 3:2

 Balance Sheet As On 31st March 2018 Liabilities Amount (₹) Assets Amount (₹) Creditors 30,000 Cash 3,000 Capital A/c Building 15,000 Om 21,000 Machinery 21,000 Jay 21,000 Furniture 900 Current A/c Stock 12,300 Om 3,750 Debtors 27,000 Jay 3,450 79,200 79,200

They take Jagdish into partnership on 1st April 2018 the terms being

1. Jagdish should pay 3,000 as his share of Goodwill. 50% of goodwill withdrawn by partners in cash.

2. He should bring 9,000 as capital for 1/4th share in future profits.

3. Building to be valued at 18,000, Machinery and Furniture to be reduced by 10%

4. A Provision of 5% on debtors to be made for doubtful debts.

5. Stock is to be taken at a value of 15,000.

Prepare profit and loss A/c, Partner’s Current A/c, Balance Sheet of the new firm

## Chapter 3: Reconstitution of Partnership (Admission of Partner)

Exercise 3 (Objective Type Questions)Exercise 3 (Practical Problems)

## Balbharati solutions for Book-keeping and Accountancy 12th Standard HSC Maharashtra State Board chapter 3 - Reconstitution of Partnership (Admission of Partner)

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Concepts covered in Book-keeping and Accountancy 12th Standard HSC Maharashtra State Board chapter 3 Reconstitution of Partnership (Admission of Partner) are Reconstitution of Partnership, Admission of a Partner, Concept of Goodwill, Admission of a Partner - Revaluation of Assets and Liabilities.

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