D. K. Goel solutions for Accountancy Volume 1 and 2 [English] Class 12 ISC chapter 3 - Admission of a Partner [Latest edition]

The sacrificing ratio of Dev, Gautam and Kamal will be:

The total interest on capital allowed by the firm to the partners will be:

Deficiency in Naveen’s profits will be:

The average profits of the firm from the year 2017-18 to the year 2020-21 were:

The value of goodwill of the firm on Satvik’s admission was:

Satvik is unable to bring in cash his share of goodwill. The account to be debited to record his goodwill compensation will be:

At the time of Kavi’s admission, the Workmen Compensation Reserve of:

The value of Land and Building in the Balance Sheet of the reconstituted firm will be:

Creditors include an amount of ₹ 5,000 received as commission from Amar. The necessary adjustment is required to be made.

The provision for Doubtful Debts in the reconstituted firm will be:

The date of the Balance Sheet of the reconstituted firm will be:

Loss on Revaluation will be:

New Profit Sharing Ratio will be:

In respect of goodwill:

A’s Capital A/c balance will be:

B’s Capital A/c balance will be:

Gain on revaluation will be:

New Profit Sharing Ratio will be:

Choose the Correct Option:

Entry for dishonour of Bill of Exchange will be:

A’s Capital A/c balance will be:

Loss on revaluation will be:

New Profit Sharing Ratio will be:

A’s Capital Account Balance will be:

C’s Capital Account Balance will be:

Karan and Vijay are partners in a firm sharing profits and losses in the ratio of 4 : 3. They admit Shrey for `1/3` share in the profits.

On the date of Shrey’s admission:

1. The capitals of Karan and Vijay are: ₹ 40,000 and ₹ 30,000, respectively.
2. Profit and Loss Account has a debit balance of ₹ 7,000.
3. General Reserve shows a balance of ₹ 21,000, which is not to be disturbed.
4. Goodwill of the firm is valued at ₹ 42,000.
5. The cash at bank is ₹ 15,000.
6. Shrey brings in proportionate capital and his share of goodwill in cash.

You are required to prepare:

1. Partners’ Capital Accounts.
2. Cash at Bank Account of the reconstituted firm on the date of Shrey’s admission.

Aditi and Parul are partners in a firm with capitals of ₹ 35,000 each. They shared profits and losses in the ratio of 3 : 1.

On 1st April, 2017, they admit Chanda into their partnership with a `1/5`th share in the profits.

Chanda brings in ₹ 40,000 as her capital and also brings her share of goodwill in cash.

Her share of goodwill is calculated on the basis of her capital contribution and her share of profits in the firm.

At the time of Chanda’s admission:

1. The firm had a Workmen’s Compensation Reserve of ₹ 60,000 against which there was a claim of ₹ 20,000.
2. Creditors of ₹ 8,000 were paid by Aditi privately, for which she is not to be reimbursed.
3. There was no change in the value of other assets and liabilities.

You are required to, on the date of Chanda’s admission:

1. Calculate the goodwill of the firm. (Show the workings clearly).
2. Pass the necessary journal entries to record the above transactions.

Sharan and Angad are partners in a firm sharing profits and losses in the ratio of 3 : 2.

On 1st April, 2022, they admit Akhil as a partner for `1/5`th share in the profits. Akhil acquires `1/5` of his shares from Sharan and the balance from Angad.

On the date of Akhil’s admission, the goodwill of the firm was valued at ₹ 90,000. Akhil contributed the following assets towards his capital and his share of goodwill:

You are required to:

1. Calculate the sacrificing ratio of the partners.
2. Pass the necessary journal entries on Akhil’s admission, ascertaining Akhil’s capital contribution and assuming that he brings into the firm his share of goodwill in cash/kind.

Amay and Sujoy are partners sharing profits and losses in the ratio of 3 : 1. Their Balance Sheet as at 31st March, 2023, is given below.

On 1st April, 2023, they admit Malay as a new partner for `1/4` share in the profits on the following terms:

1. Malay is to bring his share of capital of ₹ 1,20,000 and to pay ₹ 10,000 in cash for his share of goodwill.
2. Stock worth ₹ 45,000 is to be taken over by Amay at ₹ 25,000.
3. Bills Payable of ₹ 20,000 to be honoured by Sujoy, for which he is not to be reimbursed.
4. The capitals of Amay and Sujoy are to be adjusted on the basis of Malay’s Capital and his share in the profits, any surplus to be readjusted through the current account and deficiency through cash.

You are required to prepare the Partners’ Capital Accounts.

Mitu and Ritu are partners sharing profits and losses in the ratio of 2 : 3. An extract of their Balance Sheet as at 31^st March, 2023, is given below:

On 1^st April, 2023, they admit Nitu as a new partner for `1/5` share in the profits on the following terms regarding the treatment of the reserves and the accumulated losses:

1. Accumulated losses, if any, to be written off.
2. A workmen compensation claim of ₹ 10,000 to be adjusted against the Workmen Compensation Reserve. The balance of the reserve is not to be distributed.
3. Any loss in the value of investments is to be adjusted against the Investment Fluctuation Reserve. The balance of the Investment Fluctuation Reserve is to be distributed.
4. Provision for doubtful debts to be created to the extent of 10% of the debtors from the General Reserve. The remaining amount in the General Reserve is to be distributed.

You are required to pass the necessary journal entries to record the above adjustments at the time of Nitu’s admission.

Kriti and Atif are partners sharing profits and losses equally. On 31st March, 2024, they admitted David as a third partner for `1/5` share in the profits.

It is decided that on David’s admission:

• Atif would retain his original share
• Goodwill would be valued by the super profit method on the basis of the following information:

1. 
   

   Balance Sheet of Kriti and Atif (an extract) As at 31st March, 2024
   Liabilities	Amount (₹)	Amount (₹)	Assets	Amount (₹)
   General Reserve		25,000	Current A/c:
   Capital A/c:		4,25,000	Atif	10,000
   Kriti	2,50,000
   Atif	1,75,000
   Current A/c:
   Kriti		40,000

2. The normal rate of return is 12% per annum.
3. Average profits of the firm for the last four years are ₹ 74,000.

You are required to calculate:

1. The sacrificing ratio of the partners.
2. The value of goodwill of the firm at four years’ purchase of the super profit.

Anita and Anil are partners in a firm. On 1st April, 2024, they admitted Jia as a third partner. The capital accounts of the partners after considering the following adjustments on Jia’s admission are given below:

1. Loss on revaluation due to depreciation on machinery @ 20% per annum.
2. The General Reserve maintained in the old firm was not to be disturbed in the reconstituted firm.

Additional information:

On 31st March, 2024, the firm of Anita and Anil, apart from plant and machinery and a bank balance of ₹ 2,15,000, had no other asset.

You are required to prepare the Balance Sheet of the reconstituted firm on the date of Jia’s admission after considering the information given above.

Alfa and Beta are partners in a firm. Their Balance Sheet as at 31st March, 2024, is given below:

On 1st April, 2024, they admit Beta’s son Gama, as a partner on the following terms:

1. Gama to have `1/4` share of profits, half of which is to be gifted to him by his father and the remaining half to be purchased from Alfa.
2. Gama to bring in ₹ 60,000 as his capital but would be unable to bring in cash his share of goodwill.
3. Goodwill of the firm to be valued at ₹ 40,000.
4. 50% of the investment to be taken over by Alfa and Beta in their profit-sharing ratio.
5. The liability on account of Workmen’s Compensation Claim to be ₹ 30,000.

You are required to:

1. Calculate the new profit-sharing ratio of all the partners.
2. Prepare the Partners’ Capital Accounts.

On 1^st April, 2020, Anish started a business with a capital of ₹ 3,00,000.
During the three years ending 31^st March, 2023, the results of his business were:

From the year 2020-21 to the year 2022-23, Anish withdrew ₹ 30,000 from the firm for his personal use.
On 1st April, 2023, he admitted Danish into partnership on the following terms:

1. Goodwill of the firm to be valued at two years’ purchase of the average profits of the last three years.
2. Danish to have a `1/4` share in the future profits.
3. Danish’s capital is to be equal to `1/4` of Anish’s capital determined on 1^st April, 2023, after the goodwill compensation has been taken into account.

You are required to give:

1. The formula to calculate goodwill by the Average Profit Method.
2. The value of self-generated goodwill of the firm.
3. Danish’s capital contribution.

State the two main rights that a newly admitted partner acquires in the firm. 

Why should a new partner contribute towards goodwill on his admission?

State the ratio in which the old partners share the amount of cash brought in by the new partner as a premium for goodwill.

Explain the accounting treatment of goodwill when no goodwill account appears in the books of the firm and the new partner brings his share of goodwill in cash.

Explain the accounting treatment of goodwill when a goodwill account appears in the books of the firm and the new partner brings his share of goodwill in cash.

Explain the accounting treatment of goodwill when a new partner cannot bring his share of goodwill in cash.

What are accumulated profits?

What are accumulated losses?

In case of admission of a new partner, give accounting treatment of accumulated profits and losses through one journal entry when partners decide not to distribute such profit/loss.

State any two circumstances in which the sacrificing ratio may be applied.

Why are accumulated profits and losses distributed amongst the old partners before a new partner is admitted?

What is a Revaluation Account?

What is the nature of Revaluation Account?

On the admission of a partner, why are assets and liabilities revalued?

State with reason whether at the time of admission of a partner, the partnership is dissolved or the partnership firm is dissolved.

Distinguish between profit and Loss Appropriation Account and Profit and Loss Adjustment Account.

If new partner brings in proportionate capital, how can it be calculated? Give a suitable example.

Under what circumstances premium for goodwill paid by the incoming partner would never be recorded in the books of account? 

What is hidden goodwill?

How is hidden goodwill calculated?

How is goodwill paid privately by an incoming partner treated in the books of accounts?

State the two effects of the provisions of Accounting Standard-26 as issued by the Institute of Chartered Accountants of India.

P and Q are partners sharing profits in the ratio of 5 : 3. R is admitted and the new ratio is 4 : 3 : 2. What will be the sacrificing ratio?

Pawan and Jayshree are partners. Bindu is admitted for `1/4`th share. What is the ratio in which Pawan and Jayshree will sacrifice their share in favour of Bindu?

Karan, Nakul and Asha were partners in a firm sharing profits and losses in the ratio 3 : 2 : 1. At the time of admission of a partner, the goodwill of the firm was valued at ₹ 2,00,000. The accountant of the firm passed the entry in the books of accounts and thereafter showed goodwill of ₹ 2,00,000 as an asset in the Balance Sheet. Is he correct in doing so? Why?

List any two items that need adjustments in books of accounts of a firm at the time of admission of a partner.

Atul and Neera were partners in firm sharing profits in the ratio of 3 : 2. They admitted Mitali as a new partner. Goodwill of the firm was valued at ₹ 2,00,000. Mitali brings her share of a goodwill premium of ₹ 20,000 in cash, which is entirely credited to Atul's Capital Account. Calculate the new profit sharing ratio.

S, T and U were partners in a firm. They admitted V as a new partner. S and T sacrificed `1/3`rd and `1/4`th of their share, respectively, in favour of V. Calculate the new profit-sharing ratio of S, T, U and V.

A and B were partners in a firm sharing profits in the ratio of 3 : 2. C and D were admitted as new partners. A sacrificed `1/4`th of his share in favour of C and B sacrificed 50% of his share in favour of D. Calculate the new profit-sharing ratio of A, B, C and D.

A and B are partners in a firm. They admit C as a partner with a `1/5`th share in the profits of the firm. C brings ₹ 4,00,000 as his share of capital. Calculate the value of C’s share of Goodwill on the basis of his capital, given that the combined capital of A and B after all adjustments is ₹ 10,00,000.

A and B are partners in a firm sharing profits and losses in the ratio of 3 : 2. On 1st April, 2019, they decided to admit C, and their new ratio is decided to be equal. Pass the necessary journal entry to distribute the Investment Fluctuation Reserve of ₹ 60,000 at the time of C’s admission, when Investment appear in the books at ₹ 2,10,000 and its market value is ₹ 1,90,000.

A and B are in partnership, sharing profits and losses in the ratio of 3 : 2. They admit C into the partnership with a `1/5`th share, which he acquires equally from A and B. The accountant has calculated the new profit-sharing ratio as 5 : 3 : 2. Is the accountant correct?

A, B, and C are partners sharing in the ratio of 3 : 2 : 1. They admit D for a `1/4`th share. It is agreed that B would retain his original share. The new ratio will be ______.

Joy and Deb were partners sharing profits and losses in the ratio of 2 : 1. They admitted Gopi into the partnership for a `1/5` share. At the time of Gopi’s admission, Furniture (book value ₹ 2,50,000) was reduced by 40%, and Machinery (book value ₹ 1,50,000) was reduced to 40%.

What was the net decrease in value of assets?

Deepa and Pia are in partnership sharing profits and losses in the ratio of 3 : 2. They admit Charu as a partner for a `1/5` share in the profits. The capitals of Deepa and Pia, before adjusting the loss of ₹ 5,000 on revaluation of assets and liabilities, are ₹ 30,000 and ₹ 20,000 respectively. It is decided that Charu will contribute 25% of the combined capitals of Deepa and Pia. What is Charu’s capital contribution?

Aman and Vinod are partners in a firm. Their Balance Sheet showed:

Gross Debtors: ₹ 1,52,000

Provision for doubtful debts: ₹ 1,000

On Milin’s admission as a new partner, the assets and liabilities are to be revalued as:

1. Unaccounted accrued income of ₹ 10,000 to be provided for.
2. Bills Payable of ₹ 10,000 which were recorded, to be discharged at a rebate of 10%.
3. Debtors of ₹ 2,000 to be irrecoverable.
4. Provision for doubtful debts to be provided @ 2% of the debtors.

What is the net effect of revaluation of assets and liabilities?

A and B are partners sharing profits in the ratio of 5 : 3. C is admitted to the partnership for `1/4`th share of future profits. Calculate the new profit sharing ratio.

A and B were partners sharing profits in the ratio of 21 : 9. C was admitted on `9/21` share in the profits. Calculate new profit sharing ratio of the partners.

P and Q are partners sharing profits and losses in the ratio of 4 : 3. They admit R as a partner for a `1/7`th share in profits, which he acquires equally from P and Q. Calculate the new profit-sharing ratio of the partners.

P, Q and R were partners in a firm sharing profits in the ratio of 3 : 2 : 1. They admitted S as a new partner for `1/8`th share in the profits, which he acquired `1/16`th from P and `1/16`th from Q. Calculate new profit-sharing ratio of P, Q, R and S.

X and Y are partners sharing profits in the ratio of 2 : 1. Z is admitted with `5/11`th share, which he takes `3/11`th from X and `2/11` from Y. Calculate the new profit-sharing ratio of the partners.

A and B are partners sharing profits in the ratio of 5 : 3. They admit C on a `1/4`th share, which he acquires `1/6`th from A and `1/12`th from B. Calculate the new profit-sharing ratio of the partners.

A and B are partners sharing profits in the ratio of 3 : 2. They admit C into the partnership, giving him `1/2` share in profits, which he acquires from A and B in the ratio of 3 : 1. Calculate the new profit ratio.

X and Y are partners sharing profits and losses in the ratio of 3 : 2. They admit Z as a new partner who gets `1/5`th share. Calculate the new profit-sharing ratio in each of the following cases:

1. If Z acquires his share from X and Y in their profit-sharing ratio;
2. If he acquires `3/20`th from X and `1/20`th from Y;
3. If he acquires `1/10`th from X and `1/10`th from Y;
4. If he acquires `1/20`th from X and `3/20`th from Y;
5. If he acquires his share entirely from X;
6. If he acquires his share entirely from Y.

A, B and C are partners in a firm sharing profits in 4 : 3 : 3 ratio. They decided to admit their manager D into the partnership. A surrendered `1/4` of his share in favour of D; B surrendered `1/5` of his share in favour of D, and C surrendered `1/6` of his share in favour of D. Calculate the new profit sharing ratio.

A and B are partners sharing profits and losses in the ratio of 3 : 2. They admit X and Y as new partners. A surrendered `1/3`rd of his share in favour of X and B surrendered `1/4`th of his share in favour of Y. Calculate the new profit sharing ratio of A, B, X and Y.

A and B share profits and losses in the ratio of 3 : 2. They admit C as a new partner for `1/3`rd share in the profits of the firm which he acquired from A and B in the ratio of 2 : 3. After some time, they admitted D as a new partner for `1/5`th share in the profits which he acquired equally from A and C.

Calculate:

1. New profit sharing ratio of A, B and C;
2. New profit sharing ratio of A, B, C and D.

P and Q share profits in 3 : 2. They admit R and S with `1/4  "and"  1/5` share respectively. Calculate the new ratios of partners.

A, B and C share profit and losses in the ratio of 3 : 2 : 1. Upon admission of D, they agreed to share as follows:

1. 4 : 4 : 2 : 2
2. 2 : 4 : 2 : 4

Calculate sacrificing ratios.

A and B are partners sharing profits in the ratio of 5 : 3. C is admitted to the partnership for `1/4`th share of future profits. Calculate the new profit sharing ratio and the sacrificing ratio.

A and B are partners sharing profits in the ratio of 7 : 3. C was admitted. A surrendered `1/7`th of his share and B `1/3`rd of his share in favour of C. Calculate the sacrificing ratio and the new profit-sharing ratios of the partners.

A and B are partners in a firm sharing profits and losses in the ratio of 3 : 2. C is admitted into partnership. A sacrifices `1/3` of his share and B `1/10` from his share in favour of C. Determine the sacrificing ratio and the new profit sharing ratio.

A and B are partners in a firm sharing profits and losses in the ratio of 5 : 3. They admit C and D as new partners. A sacrifices `1/2` of his share in favour of C and B sacrifices `1/4` from his share in favour of D. Calculate their new profit sharing ratio.

A, B, C and D are in partnership sharing profits and losses in the ratio of 36 : 24 : 20 : 20 respectively. E joins the partnership for 20% share and A, B, C and D in future would share profits among themselves as `3/10 : 4/10 : 2/10 : 1/10`. Calculate new profit-sharing ratio after E’s admission.

A and B are partners in a firm sharing profits in the ratio of 3 : 1. They admit C and decide that the profit-sharing ratio between B and C shall be same as existing between A and B. Calculate new profit-sharing ratio and the sacrificing ratio.

A, B and C are partners sharing in the ratio of 4 : 3 : 2. They admit D for `1/9`th share. It is agreed that A would retain his original share. Calculate the new ratios and sacrificing ratios.

P, Q and R are partners sharing profits and losses in the ratio of 5 : 3 : 2. S is admitted as a new partner for `1/5`th share. P sacrifices `1/10` th from his share in favour of S and remaining sacrifice was made by Q and R in the ratio of 2 : 1. Calculate sacrificing ratio and new profit sharing ratio.

L, M and N are partners sharing profits in the ratio of 3 : 2 : 1. They admit O into partnership. O brings in cash ₹ 4,50,000 as capital and ₹ 1,50,000 as goodwill for `1/5`th share of profits. Pass journal entries and find out new profit sharing ratios when:

1. Goodwill is retained in the firm;
2. goodwill is withdrawn by old partners.

P and Q are partners sharing profits and losses in the ratio of 2 : 1. They admit R into partnership for `4/9`th share in profits which he acquires equally from P and Q. R brings in cash ₹ 2,50,000 as capital and ₹ 1,80,000 as goodwill.

Pass journal entries and find out new profit sharing ratios.

X and Y are partners sharing profits in the ratio of 4 : 3. Z joins partnership for `2/7`th share in the profits (of which he acquires `3/4`th from X and `1/4`th from Y). Z brings in ₹ 3,00,000 for his capital and ₹ 1,20,000 for goodwill. Half of the amount of goodwill is withdrawn by the old partners.

Pass necessary Journal entries and find out new profit sharing ratio.

K and Y were partners in a firm sharing profits in 3 : 2 ratio. They admitted Z as a new partner for `1/3`rd share in the profits of the firm. Z acquired his share from K and Y in 2 : 3 ratio. Z brought ₹ 80,000 for his capital and ₹ 30,000 for his `1/3`rd share as premium. Calculate the new profit sharing ratio of K, Y and Z and pass necessary journal entries for the above transactions in the books of the firm.

Anju and Manju are partners, sharing profits and losses in the proportion of 7 : 5. They agreed to admit Meenu, their manager, into partnership, who is to get one sixth share in the business. Meenu brings in ₹ 2,00,000 for her capital and ₹ 96,000 for `1/6`th share of goodwill which she acquires `1/24`th from Anju and `1/8`th from Manju. The profit for the first year of the new partnership amount to ₹ 4,80,000.

Make the necessary Journal entries in connection with Meenu’s admission and divide the profit between the partners.

X and Y share profits and losses in the ratio of 3 : 2. They admit Z as a partner who pays ₹ 72,000 as premium for goodwill for `1/4`th share in the future profits of the firm.

Pass Journal entries appropriating the premium money and show the new profit sharing ratio in each of the following cases:

1. if he acquires his share of profits in the original ratio of existing partners.
2. if he acquires his share of profits in equal proportions from the existing partners.
3. if he acquires his share in the ratio of 2 : 3 from the existing partners.
4. if he acquires his share of profits as `7/32` th from X and `1/32` th from Y.

Partners A, B and C share the profit of a business in the ratio of 3 : 2 : 1 respectively. For one-sixth share they admit D who brings in ₹ 2 00,000 including ₹ 60,000 for his share of goodwill. Show the journal entries if A, B, C and D decide to share the profits respectively in the ratio of (a) 15 : 10 : 5 : 6; (b) 5 : 3 : 2 : 2 and (c) 2 : 2 : 1 : 1. Assume that the entire cash brought in by D remains in the business. Give Journal entries.

P and Q are partners sharing profits in the ratio of 7 : 5. They admit R into partnership for `1/4` share who pays ₹ 30,000 in cash for goodwill. P and Q decide to share future profits equally among themselves. Pass entries.

X and Y are partners sharing profits and losses in the ratio of 2 : 1. They agree to admit Z into partnership who gets `1/3`rd share in the profits. Z brings in ₹ 50,000 for his capital and the necessary amount for goodwill in cash. Goodwill of the firm is valued at ₹ 36,000. X, Y and Z agree to share future profits equally. The amount of goodwill is withdrawn from the business. Pass entries.

A, B and C are partners sharing profits and losses in the ratio of 3 : 2 : 1. They admit D for `1/4`th share in the profits and he brought in ₹ 1,50,000 as his share of goodwill which was credited to the Capital Accounts of B and C respectively with ₹ 1,25,000 and ₹ 25,000.

Calculate the new profit sharing ratio.

A and B are partners sharing profits and losses as 2 : 1. On 1st April, 2022 they admit C as a partner for `1/4`th share who pays ₹ 4,50,000 as goodwill privately. On 1st April, 2023, they take D as a partner for `3/5`th share who brings ₹ 4,00,000 as goodwill, out of which half is withdrawn by the existing partners. On lst April, 2024, E is admitted as a partner for `1/6`th share who brings ₹ 5,00,000 as goodwill which is retained in the business.

Journalise the above transactions in the books of the firm.

P and Q are partners sharing profits and losses as 2 : 3. R and S are admitted and profit sharing ratio becomes 3 : 4 : 3 : 2. Goodwill is valued at ₹ 3,00,000. R brings required goodwill and ₹ 2,00,000 cash for Capital. S brings in ₹ 1,00,000 cash and Motor Vehicle for ₹ 80,000 as his capital in addition to the required amount of goodwill in cash.

Show the necessary journal entries.

Ram and Rahim are partners in a firm sharing profits in the ratio of 3 : 2. On April 1, 2023, they admit Raj as a new partner for a `3/13`th share in the profits. The new ratio will be 5 : 5 : 3. Raj contributed the following assets towards his capital and for his share of goodwill: Land ₹ 2,50,000; Plant and Machinery ₹ 1,50,000; Stock ₹ 80,000; and Debtors ₹ 70,000. On the date of admission of Raj, the goodwill of the firm was valued at ₹ 5,20,000. Record necessary journal entries in the books of the firm.

Asha and Aditi are partners in a firm sharing profits and losses in the ratio of 3 : 2. They admit Raghav as a partner for `1/4`th share in the profits of the firm. Raghav brings ₹ 6,00,000 as his capital and his share of goodwill in cash. Goodwill of the firm is to be valued at two years’ purchase of average profits of the last four years.
The profits of the firm during the last four years are given below:

The following additional information is given:

1. To cover management cost an annual charge of ₹ 56,250 should be made for the purpose of valuation of goodwill.
2. The closing stock for the year ended 31.3.2017 was overvalued by ₹ 15,000.

Pass necessary journal entries on Raghav’s admission showing the working notes clearly.

Hints:

A management cost of ₹ 56,250 will be deducted from each year’s profit.

Overvaluation of Closing Stock will be deducted from the profit of 2016-17.

A and B are partners, sharing profit and losses in the ratio of 3 : 2. Goodwill exists in their Balance Sheet at ₹ 24,000, when C is admitted into partnership for `1/5`th share in profit. He pays ₹ 50,000 for capital and ₹ 8,000 as goodwill. The ratio of the partners A, B and C in the new firm would be 2 : 2 : 1.

Pass journal entries in the books of the new firm to record above adjustments.

A and B carrying on business as partners used to share profits and losses thus; A `4/7`ths and B `3/7`ths, and goodwill existing in the books of the firm at ₹ 2,80,000 when C was admitted as a partner having `1/7`th share in profits and losses. C was asked to pay a premium of ₹ 75,000 for goodwill, and the profit-sharing ratio as between A and B remained unchanged.

Show entries in the journal of the firm.

A and B are partners sharing profits in the ratio of 4 : 3. C is admitted into the partnership and the new ratio is determined at 3 : 2 : 1. C does not pay anything for his share of goodwill. On C’s admission firm’s goodwill was valued at ₹ 84,000. Pass journal entry.

A, B and C were partners in a firm sharing profits and losses in the ratio of 3 : 2 : 1. They admit D into partnership with `1/4`th share which he acquires from A and B in the ratio of 2 : 1. On D’s admission the goodwill of the firm is valued at ₹ 6,00,000. However, D is unable to bring his share of goodwill in cash.

Pass necessary journal entry and also calculate the new profit sharing ratio.

Aru and Beena are partners in a firm sharing profits in the ratio of 2 : 1. They admit Charu and Divya as two new partners. The new profit sharing ratio is agreed at 4 : 3 : 2 : 1. Charu introduced ₹ 5,00,000 and Diya ₹ 3,00,000 as their capitals.

Charu brings in ₹ 60,000 in cash for her share of goodwill but Diya is unable to bring her share of goodwill in cash.

Pass necessary journal entries.

A and B are partners sharing profits in the ratio of 3 : 2. On 1st April, 2022, they admit C as a new partner for `1/4`th share. C acquires `1/5`th of his share from A.

Goodwill on C’s admission is to be valued on the basis of the capitalisation of average profits of the last five years. Profits were:

Year ended

31st March, 2018 Profit ₹ 50,000
31st March, 2019 Profit ₹ 1,20,000 (including gain of ₹ 40,000 from sale of fixed assets)
31st March, 2020 Loss ₹ 60,000 (after charging a loss by Fire ₹ 50,000)
31st March, 2021 Loss ₹ 1,00,000 (after charging voluntary retirement compensation paid ₹ 1,50,000)
31st March, 2022 Profit ₹ 1,90,000

On 1st April, 2022, the firm had assets of ₹ 7,00,000 and external liabilities of ₹ 2,20,000.

The normal rate of return on capital is 12%.

C brings in ₹ 1,25,000 for his capital but is unable to bring his share of goodwill in cash.

1. You are required to calculate C’s share of goodwill,
2. Pass necessary journal entries, and
3. Calculate new profit-sharing ratios.

Hint:

C acquires `1/5`th of his share from A and the remaining `4/5`th of his share from B.

P, Q and R share profits in the ratio of 5 : 3 : 2. S was admitted into partnership. S brings in ₹ 30,000 as his capital. S is entitled for `1/5`th share in profits which he acquires equally from P, Q and R. Goodwill of the firm is to be valued at three years’ purchase of the last four years’ average profits. The profits of the last four years’ are ₹ 32,000, ₹ 38,000, ₹ 35,000 and ₹ 31,000, respectively. S cannot bring goodwill in cash. Goodwill already appears in the books at ₹ 50,000. Give journal entries.

X and Y are partners sharing profits in the ratio of 3 : 2. Goodwill appears in their balance sheet at ₹ 60,000. Z is admitted as a partner for `1/4`th share in the profits. The total goodwill of the firm is valued at ₹ 2,00,000.

Pass journal entries if:

1. Z cannot bring in cash his share of goodwill.
2. Z brings in cash his share of goodwill.

Hint: In both cases, goodwill appearing in the balance sheet at ₹ 60,000 will be written off between old partners in old ratio.

A and B are partners sharing profits in the ratio of 5 : 3. They admit C into the firm for `3/10`th profit which he takes `2/10`th from A and `1/10`th from B and brings ₹ 1,50,000 as premium in Cash out of his share of ₹ 3,90,000. Goodwill account does not appear in the books of A and B. Give journal entries and the new ratio of A, B and C.

Hint: Premium for Goodwill A/c will be debited by ₹ 1,50,000 and Current Account of C will be debited by ₹ 2,40,000 and Capital Accounts of A and B will be credited by ₹ 2,60,000 and ₹ 1,30,000 respectively.

A and B are partners sharing profits in the ratio of 3 : 1. C is admitted as a partner with `2/9`th share; A and B will in future get `4/9`th and `3/9`th share of profits. C pays ₹ 20,000 for goodwill. Pass the necessary journal entries.

A, B and C were partners in a firm sharing profits in the ratio of 2 : 2 : 1. They admitted D for `1/6`th share in the profits. The new profit sharing ratio will be 13 : 8 : 4 : 5 respectively. D brought ₹ 5,00,000 for his capital and ₹ 60,000 for his share of goodwill. Pass necessary entries.

Mohan, Naresh and Om were in partnership sharing profits and losses in the ratio of 10 : 4 : 1. On 1st April, 2021 their capitals were ₹ 3,00,000; ₹ 1,50,000 and ₹ 50,000 respectively. On this date they admit Piyush as a new partner and the new profit sharing ratio is agreed at 5 : 4 : 4 : 2. The following terms were also agreed upon:

1. Piyush will bring in ₹ 40,000 as his capital.
2. He will also bring in his share of goodwill in cash. Goodwill is to be valued on the basis of capitalisation at 10% of the average profits of the last three years. Profits of the last three years were:
   

   	₹
   Year ended 31st March 2019	48,000
   Year ended 31st March 2020	75,000
   Year ended 31st March 2021	72,000

3. The new partner is entitled to an annual salary of ₹ 7,500 in addition to his share of profit. Om personally guaranteed that Piyush’s share of profit shall not be less than ₹ 30,000.

Profits for the year ended 31st March 2022 amounted to ₹ 2,10,000 before charging Piyush’s salary.

Prepare necessary entries at the time of admission of the new partner and show the distribution of profits for the year ended 31st March, 2022.

Asmi, Kiwi and Tia are patners in a firm sharing profits in the ratio of 2 : 1 : 2. They admitted Mithi for `1/5`th share in profit who will bring ₹ 2,40,000 as her share of goodwill. Goodwill is adjusted by passing the following entry:

Find out new profit sharing ratio after admission of Mithi.

A and B are partners in a firm, and their profit sharing ratio is 2 : 1. C is admitted as a new partner for `1/4`th share in the profits. The following entry is passed when C brought ₹ 1,80,000 as his share of goodwill and credited to A and B:

Calculate the new profit sharing ratio.

Pass journal entries to record the following transactions on the admission of a new partner:

1. Land and building are undervalued by ₹ 2,00,000.
2. Stock is overvalued by 20% (Book Value of Stock ₹ 60,000).
3. Provision to be made for compensation of ₹ 20,000 to an ex-employee.
4. Sundry Debtors appeared in the books at ₹ 1,50,000. They are estimated to produce not more than ₹ 1,30,000.
5. Creditors include an amount of ₹10,000 received as commission.
6. A bill of exchange of ₹ 40,000 which was previously discounted with the banker was dishonoured on 31st March, 2024, but no entry has been passed for it.
7. Value of Machinery is to be decreased to ₹ 1,20,000 (Book Value ₹ 2,00,000).
8. Value of Machinery is to be decreased by ₹ 1,20,000 (Book Value ₹ 2,00,000).
9. Expenses on revaluation amount to ₹ 8,000 have been paid by partner X.

Ayushi and Shristhi are partners sharing profits in 3 : 2. Their Balance Sheet showed Stock at ₹ 3,10,000; Machinery at ₹ 4,95,000; Debtors at ₹ 6,00,000; Creditors at 3,47,000. They admit Tina as a partner, and a new profit-sharing ratio is agreed at 4 : 3 : 2. The following terms were agreed:

1. Machinery is overvalued by 10%.
2. Unrecorded debtors of ₹ 20,000 be brought into books and provision for doubtful debts be created at 10%.
3. Creditors of ₹ 27,000 are not likely to be paid.

Shristhi’s share in loss on revaluation amounted to ₹ 36,000. You are required to calculate the revalued value of stock.

Hint: Loss on Revaluation ₹ 90,000.

A and B were in partnership, sharing profits and losses in the ratio of 3 : 1. On 1st April, 2024, they admit C as a partner on the following terms:

1. That C brings ₹ 1,00,000 as his capital and ₹ 50,000 for goodwill, half of which to be withdrawn by A and B.
2. That the value of land and buildings is to be appreciated by 15 per cent and that of stocks and machinery and fixtures is to be reduced by 7 and 5 per cent, respectively.
3. That provision for doubtful debts be made at 5 per cent.
4. That ₹ 15,000 be provided for an unforeseen liability.
5. That C to be given `1/5`th share and the profit-sharing ratio between A and B to remain the same.
6. That ₹ 11,000 is to be received as commission, hence to be accounted for.

The Balance Sheet of the old partnership as at 31st March, 2024 stood as:

Give necessary Journal entries, ledger accounts and the balance sheet of the newly constituted firm.

Hints:

Khushi and Sukhi are partners in a firm sharing profits in the ratio of 5 : 4. On April 1, 2024, they admit Muskan as a new partner and the new ratio is agreed at 3 : 2 : 1. On that date there was a balance of ₹ 63,000 in the profit and loss account and a balance of ₹ 45,000 in general reserve. Record the necessary journal entries.

A and B were partners in a firm sharing profits in the ratio of 7 : 3. On 1-3-2024, they admitted C as a new partner for `1/6`th share in the profits of the firm. They fixed the new profit sharing ratio as 3 : 2 : 1. The P & L A/c on the date of admission showed a balance of ₹ 20,000 (Cr.). The firm also had a reserve of ₹ 1,50,000. C is to bring ₹ 40,000 as a premium for his share of goodwill.

Showing your calculations clearly, pass necessary journal entries to record the above transactions.

X and Y are partners in a firm. On 1st April, 2024, they admitted Z as a partner and a new profit-sharing ratio is agreed at 3 : 2 : 1. Their Balance Sheet disclosed ‘Workmen Compensation Reserve’ amounting to ₹ 1,00,000 on this date. Show the accounting treatment, if

1. Claim for Workmen Compensation is estimated at ₹ 1,20,000.
2. Claim for Workmen Compensation is estimated at ₹ 90,000.

A, B and C are partners sharing profits in 2 : 2 : 1. On 1st April, 2024, they admitted Z for `1/4`th share. On the date of admission, the following items appeared in their Balance Sheet:

Pass necessary journal entries.

P and Q were partners sharing profits in the ratio of 2 : 1. On 1st April, 2024, they admitted R as a new partner and the new profit-sharing ratio of P, Q and R is agreed at 3 : 1 : 1. R brought in ₹ 2,00,000 as his capital and ₹ 60,000 as his share of premium for goodwill.

On the date of R’s admission, the Balance Sheet of P and Q showed a credit balance of ₹ 45,000 in Profit and Loss A/c and Workmen Compensation Reserve of ₹ 80,000. It was agreed that there was a claim of Workmen Compensation for ₹ 50,000.

Pass necessary journal entries on R’s admission.

A and B sharing profits and losses in the ratio of 3 : 2, decide to admit C for `1/3`rd share. On this date, their Balance Sheet disclosed the following items:

Show the accounting treatment in the following cases:

Case (i) If the market value of investments is ₹ 2,90,000 Case (ii) If the market value of investments is ₹ 2,45,000 Case (iii) If the market value of investments is ₹ 3,00,000 Case (iv) If the market value of investments is ₹ 3,25,000

Charu and Deepika were partners sharing profits in the ratio of 3 : 2. They admitted Esha as a new partner and the new ratio is agreed at 4 : 3 : 2. On the date of Esha’s admission, the Balance Sheet of Charu and Deepika disclosed General Reserve ₹ 1,20,000; Dr. balance in Profit & Loss Account ₹ 40,000; Investments ₹ 2,00,000 and Investment Fluctuation Reserve ₹ 60,000.

The following was agreed upon Esha’s admission:

1. Esha will bring ₹ 3,00,000 as her Capital and her share of the goodwill premium in cash.
2. Goodwill of the firm be valued ₹ 1,80,000.
3. The market value of investments was ₹ 2,30,000.

Pass the necessary journal entries.

A, B and C were partners in a firm sharing profits and losses in the ratio of 2 : 2 : 1. Their Balance Sheet as at 31st March, 2024 was as follows:

They admit D into partnership for `1/4`th share on 1st April, 2024. Give necessary journal entries to adjust the accumulated profits and losses.

Vimal and Nirmal are partners sharing profits in the ratio of 3 : 2. Following was the position of their business as at 31st March, 2024:

On 1st April, 2024, Kailash agrees to join the business on the following terms and conditions:

1. He will introduce ₹ 40,000 as his capital and pay ₹ 20,000 to the existing partners for his share of goodwill.
2. The new profit-sharing ratio will be 2 : 1 : 1 respectively for Vimal, Nirmal and Kailash.
3. A revaluation of assets will be made by reducing plant and machinery to ₹ 35,000 and stock by 10%. Provision of ₹ 1,000 is to be created for bad and doubtful debts.

Pass journal entries for the above arrangements and give the balance sheet of the newly constituted firm. Also specify the sacrificing ratio.

X and Y share profits in the ratio of 5 : 3. Their balance sheet as at 31st March, 2024, was as follows:

They admit Z into partnership on 1st April, 2024 with `1/8`th share in profits. Z brings ₹ 20,000 as his capital and ₹ 12,000 for goodwill in cash. Z acquires his share entirely from X. Following revaluations are also made:

1. Provident fund is to be increased by ₹ 5,000.
2. Debtors are all good. Therefore, no provision is required on debtors.
3. Stock includes ₹ 3,000 for obsolete items.
4. Creditors are to be paid ₹ 1,000 more.
5. Fixed Assets are to be revalued at ₹ 70,000.

Prepare Journal entries, necessary accounts and a new balance sheet. Also calculate the new profit-sharing ratio.

X and Y are partners. They admit Z as a partner and a new profit-sharing ratio is agreed at 3 : 2 : 1. Z brings in Capital of ₹ 1,50,000 and ₹ 40,000 as a premium for goodwill in Cash.

Their Balance Sheet was as follows:

The assets and liabilities are revalued as under:

1. Provision for Doubtful Debts is found in excess by ₹ 4,000.
2. Building was found under valued by 20% and Machinery overvalued by 20%.
3. Part of the stock which had been included at a cost of ₹ 10,000 had been badly damaged in storage and could only expect to realise ₹ 2,000.
4. Creditors were written off ₹ 6,000.

Pass necessary journal entries.

Hint:

No. (ii) Dr. Building A/c and Cr. Revaluation A/c by ₹ 50,000
Dr. Revaluation A/c and Cr. Machinery A/c by ₹ 20,000

No. (iii) Dr. Revaluation A/c and Cr. Stock A/c by ₹ 8,000.

Gopal and Govind are partners sharing profits and losses in the ratio of 60 : 40. The firm’s Balance Sheet as at 31.3.2024 was as follows:

Due to financial difficulties, they have decided to admit Guru as a partner in the firm from 1.4.2024 on the following terms:

Guru will be entitled to 40% of the profits.

Guru will bring in cash ₹ 1,00,000 as capital. It is agreed that Goodwill of the firm will be valued at 2 years’ purchase of 3 years’ normal average profits of the firm and Guru will bring in cash his share of Goodwill. It was also decided that the partners will not withdraw their share of goodwill nor will the goodwill appear in the books of account.

The profits of the previous three years were as follows:

For the year ended 31.3.2022 profit ₹ 20,000 (including an insurance claim received for ₹ 40,000).

For the year ended 31.3.2023 loss ₹ 80,000 (including voluntary retirement compensation paid ₹ 1,10,000).

For the year ended 31.3.2024 profit ₹ 1,05,000 (including a profit of ₹ 25,000 on the sale of assets).

It was decided to revalue the assets on 31.3.2024 as follows:

The new profit-sharing ratio after the admission of Guru was 35 : 25 : 40.

Pass Journal entries on admission, show goodwill calculation and prepare Revaluation Account, partners’ Capital Accounts, and Balance Sheet as on 1.4.2024 after the admission of Guru.

A and B are partners sharing profits in 3 : 1. Their Balance Sheet as at 31st March, 2024 stood as follows:

On 1st April, 2024 they admit C as a new partner on the following terms:

1. The new profit-sharing ratio of A, B and C will be 3 : 2 : 1.
2. Land and Buildings are undervalued by 10%.
3. All debtors are good.
4. C to bring in ₹ 5,00,000 as Capital and his share of goodwill amounting to ₹ 60,000 in cash.

You are required to prepare Partner’s Capital Accounts.

Gautam and Rahul are partners in a firm, sharing profits and losses in the ratio of 2 : 3. Their Balance Sheet as at 31st March, 2014, was as follows:

Karim was to be taken as a partner with effect from 1st April, 2014, on the following terms:

1. The new profit-sharing ratio of Gautam, Rahul and Karim would be 5 : 3 : 2.
2. Provision for Doubtful Debts would be raised to 20% of debtors.
3. Karim would bring in cash, his share of capital of ₹ 40,000 and his share of goodwill valued at ₹ 10,000.
4. Gautam would take over the furniture at ₹ 22,000.

You are required to:

1. Pass journal entries at the time of Karim’s admission.
2. Prepare the Balance Sheet of the reconstituted firm.

Hint:

Gautam gains `1/10` share and Rahul sacrifices `3/10` share; Amount of compensation for goodwill to be made by Gautam to Rahul ₹ 5,000.

P, Q and R were in partnership, sharing profit in the proportions of 2 : 2 : 1. Their Balance Sheet as at 31st March, 2024 was as follows:

They admit S into partnership, who brings in ₹ 2,00,000 as his capital and a further ₹ 40,000 for his share of goodwill. He was given a `1/5`th share of profits, the old partners sharing the balance in the proportions of 5 : 3 : 2.

Building is to be appreciated by 20% and Machinery is to be depreciated by 10%. Sundry Debtors are worth ₹ 1,10,000. A liability of ₹ 5,000 for outstanding expenses has been omitted to be recorded in the books.

You are required to pass journal entries and prepare the opening balance sheet of the new firm.

Aman and Biswas were partners sharing profits and losses in the ratio of 3 : 2. They admitted Chetan as a new partner for 25% share. Balance sheet of Aman and Biswas was as follows as at March 31, 2023.

Chetan was admitted on the following terms:

1. Market value of Investment is ₹ 20,000.
2. There was a bad debt amounting to ₹ 6,000 and provision for Doubtful Debts is to be maintained at ₹ 9,000.
3. Building was undervalued by 20%.
4. Stock was overvalued by 20%.
5. Goodwill of the firm was valued at ₹ 1,00,000 and Chetan brings his share of goodwill in cash.
6. Chetan was to bring ₹ 1,30,000 as capital.

Prepare the Revaluation Account and Partner’s Capital Accounts.

A and B are partners in a firm sharing profits and losses in the ratio of 3 : 2. On 31st March, 2024, their Balance Sheet was as under:

On the above date, C is admitted as a partner for `3/7`th share, which he takes `2/7`th from A and `1/7`th from B. He brings ₹ 2,00,000 as a premium out of his share of ₹ 2,40,000. C brings ₹ 600,000 as his capital. Following tenns are agreed upon:

1. Premises be depreciated by 10%.
2. Accrued income of ₹ 15,000 is to be taken into account.
3. Investments are to be increased by ₹ 2,00,000 and stock is to be increased to ₹ 2,00,000.
4. A liability of ₹ 10,000 included in creditors is not likely to arise.
5. There is an unrecorded asset worth ₹ 50,000.

Prepare the Revaluation A/c, Capital A/cs and the opening Balance Sheet. Also calculate the new profit sharing ratios.

Hemant and Nishant were partners in a firm sharing profits in the ratio of 3 : 2. Their capitals were ₹ 1,50,000 and ₹ 1,30,000 respectively. They admitted Somesh on 1st April, 2024 as a new partner for a `1/5` share in the future profits. Loss on Revaluation amounted to ₹ 20,000. Somesh brought ₹ 1,20,000 as his capital. Calculate the value of goodwill of the firm and record necessary journal entries for the above transactions on Somesh’s admission.

X and Y are partners with capital of ₹ 13,00,000 and ₹ 20,00,000. They share profits in the ratio of 1 : 2. They admit Z as a partner with `1/5`th share in the profits of the firm. Z brings in ₹ 12,00,000 as his share of capital. The Profit and Loss Account showed a credit balance of ₹ 6,00,000 as on the date of admission of Z. Give the necessary Journal entries to record the goodwill.

Hint: The Balance of P & L will be credited to the Capital Accounts of X and Y and hidden goodwill will be calculated thereafter.

A, B and C were partners in a firm sharing profits in the ratio of 2 : 1 : 1. The value of the total assets of the firm was ₹ 8,00,000 and outside liabilities were valued at ₹ 1,20,000 as at that date. On 1st April, 2024 they admitted D as a new partner. D brought ₹ 2,00,000 for his capital and the necessary amount for his share of the goodwill premium. The new profit-sharing ratio between A, B, C and D will be 1 : 2 : 1 : 1.

Pass necessary journal entries for the above transactions in the books of the firm on D’s admission.

Following is the Balance Sheet of X and Y who share profits and losses in the ratio of 3 : 2 as at 31st March, 2024:

On 1st April 2020, Z is admitted as a new partner. X surrenders `1/3`rd of his share and Y surrenders `1/4`th of his share in favour of Z. Z brings in ₹ 3,60,000 for his share of Capital. Pass journal entries for recording goodwill.

A and B are partners sharing profits in the ratio of 3 : 1. Their Balance Sheet as at 31st March, 2023, was as under:

On 1st April, 2023, C is admitted as a new partner on the following terms:

1. Partners will share the profits in equal proportion.
2. C to bring in ₹ 7,60,000 as his capital but would be unable to bring his share of goodwill in cash.
3. The value of the goodwill of the firm is to be calculated on the basis of C’s share in the profits and the capital contributed by him.
4. Building is undervalued by 30% and Stock is overvalued by 20%.
5. There were outstanding expenses amounting to ₹ 6,000.

You are required to prepare:

1. Revaluation Account.
2. Partners’ Capital Accounts.

Hint:

Nem and Khem, sharing profits in the ratio of 3 : 2 admit Prem as a partner with `1/3` share in profits. He had to contribute proportionate capital. They had the following financial position:

They agreed to admit Prem as a partner on the following terms:

1. Plant and Machinery to be reduced by 10%.
2. Stock to be increased by ₹ 3,000.
3. Bad debts provision was to be created at 5%.
4. Accrued incomes not appearing in the books ₹ 900.
5. Prem was to introduce ₹ 20,000 as a premium for goodwill for a `1/3`rd share of the future profits of the firm.

Prepare Profit and Loss Adjustment Account, Capital Accounts and Balance Sheet of the new firm. Also calculate the new profit-sharing ratio.

Hint: Calculation of Prem’s Capital:

Combined Capital of Nem and Khem for `2/3` share of Profits

= 87,740 + 65,160

= ₹ 1,52,900

Therefore, the total Capital of the new firm will be

= `1,52,900 xx 3/2`

= ₹ 2,29,350

Prem’s Capital for `1/3`rd share = `2,29,350 xx 1/3`

= ₹ 76,450

Following is the Balance Sheet of A and B who are sharing profits in the ratio of 2 : 3.

C is admitted into partnership on the following terms:

1. A gives `1/4` th of his share and B gives `1/5`th of his share to C.
2. Goodwill is agreed to be valued at 2.5 year’s purchase of the average normal profit of the past three years, which were:
   

   2022	Profit	₹ 40,000 (including profit on sale of assets ₹ 50,000)
   2023	Loss	₹ 90,000 (including loss by fire ₹ 2,00,000)
   2024	Profit	₹ 2,00,000 (including insurance claim received ₹ 60,000)

3. C does not bring his share of goodwill in Cash.
4. C brings in capital proportionate to his share of profit in the firm.

Pass necessary journal entries. Also calculate the new profit-sharing ratio.

Hint: C’s Current A/c will be debited by his share of goodwill, ₹ 44,000 and Capital Accounts of A and B will be credited in their sacrificing ratio i.e., 5 : 6.

On 31st March 2024, the Balance Sheet of A and B, who were sharing profits in the ratio of 3 : 2 was as follows:

They decide to admit C as a partner. A sacrifices `2/15` from his share, while B sacrifices `1/6`th of his share in favour of C.

The following adjustments were agreed upon:

1. C shall bring ₹ 1,50,000 as his share of the goodwill premium and shall bring in proportionate capital.
2. Stock was undervalued by 10% and Plant and Machinery was overvalued by 20%.
3. Market value of investments is ₹ 2,20,000.
4. Debtors to the extent of ₹ 10,000 were unrecorded.

Prepare the Revaluation Account, Partner’s Capital Accounts and the Balance Sheet of the reconstituted firm.

Hints:

(iii) Actual Value of Stock ₹ 5,00,000

(iv) Actual Value of Plant & Machinery ₹ 5,00,000

(v) Sacrificing Ratio 2 : 1

P and Q are partners sharing profits in 3 : 1. R is admitted and the partners decide to share the future profits in the ratio of 2 : 1 : 1. The Balance Sheet of P and Q as at 31st March, 2024 was as under:

It was decided that:

1. Part of the stock, which has been included at a cost of ₹ 8,000 had been badly damaged in storage and could realise only ₹ 2,000.
2. A bill for ₹ 7,000 for electric charges has been omitted to be recorded.
3. Plant & Machinery was found overvalued by ₹ 20,000. Premises be appreciated to ₹ 3,00,000.
4. Prepaid expenses will be brought down to 40%.
5. R’s share of goodwill is valued at ₹ 20,000 but he is unable to bring it in cash.
6. R brings in capital proportionate to his share of profit in the firm.

Prepare the Revaluation A/c, Capital A/cs and the opening Balance Sheet.

Hints:

(2) Since R is unable to bring in goodwill in cash, his Current A/c will be debited instead of his Capital A/c with the amount of goodwill. Following entry will be passed for it: R’s Current A/c

Given below is the Balance Sheet of S as at 31st March, 2024:

T was admitted as a partner for a half share of profits on the following conditions:

1. Building to be appreciated by 20%.
2. Furniture and fittings to be written down to ₹ 45,000.
3. Bills receivable not to be taken over by the new partnership.
4. Provision for doubtful debts was found to be in excess by ₹ 3,000.
5. A liability of ₹ 2,000 included in creditors was not likely to arise.
6. There is an additional liability of ₹ 5,000 being outstanding salary payable to employees of the firm.

T is to bring 30,000 as a premium for goodwill and further cash to make his capital equal to `3/5`th of S’s capital.

Pass journal entries and prepare the opening Balance Sheet of the partnership.

A and B are partners sharing profits in the ratio of 2 : 1. The following items appeared in their Balance Sheet as at 31st March, 2024:

A’s Capital ₹ 48,000; B’s Capital ₹ 30,000; Creditors ₹ 15,000; Bank balance ₹ 5,000; Debtors ₹ 20,000; Machinery ₹ 36,000; Stock ₹ 44,000.

They admit C into partnership on 1st April, 2024, with a `1/6`th share in profits, which he acquires equally from A and B. He brings in ₹ 20,000 as his capital and ₹ 18,000 as goodwill in cash.

The following revaluations were made:

1. 5% provision be made for doubtful debts on Debtors and a provision of 2% be made on Debtors and Creditors for discount.
2.  ₹ 1,000 are prepaid for insurance.
3. ₹ 5,000 are outstanding for salaries.
4. ₹ 1,480 for accrued income are to be shown in the books.
5. Investments for ₹ 6,000 have been omitted to be recorded in the books.

A and B decide to have their capitals in proportion to their share in profits, based on C’s share. Any excess of capital was to be withdrawn and deficit to be paid in Cash.

Prepare the partner’s capital accounts and give the new balance sheet of the firm.

Hint: The following balance sheet will be prepared first of all to calculate the missing figure, i.e., profit or loss:

A and B are partners sharing profits in the ratio of 5 : 3. C was admitted for `1/4`th share in profits. C acquires this share as `3/16` from A and `1/4`th of his share from B. C brings in ₹ 1,00,000 as his capital.

At the time of C’s admission:

1. The firm’s goodwill was valued at ₹ 2,40,000.
2. General Reserve was ₹ 40,000.
3. Profit on revaluation of assets and liabilities was ₹ 24,000.

Before any adjustments were made, the Capitals of A and B were ₹ 1,20,000 and ₹ 70,000, respectively.

It is decided that after C’s admission, the Capitals of A and B be adjusted on the basis of C’s Capital, any excess or shortfall to be adjusted by withdrawing or bringing in Cash by the old partners. You are required to pass necessary journal entries on C’s admission.

Hint: Sacrificing Ratio 3 : 1; New Ratio 7 : 5 : 4

A and B are partners sharing profits in the proportion of 3 : 2. Their Balance Sheet as at 31st March, 2024 was as follows:

They agree to admit C as a new partner on the following terms:

1. C will be given a `2/9`th share of profit and he will bring ₹ 50,000 for his share of capital and goodwill.
2. Goodwill of the firm will be calculated at `2 1/2` years’ purchase of the average super profits of the last four years. Profits of the last four years are ₹ 40,000, ₹ 40,000, ₹ 55,000, and ₹ 65,000, respectively. Normal profits that can be earned with the capital employed are ₹ 14,000.
3. Half the amount of goodwill is withdrawn by old partners.
4. 15% of the general reserve is to remain as a provision against doubtful debts.
5. Outstanding salaries will be increased to ₹ 16,000. Stock is overvalued by 25% and Building is undervalued by 25%. Trade Marks be written off by 50%.
6. The New profit sharing ratio of partners will be 4 : 3 : 2 and the capital accounts of A and B will be adjusted on the basis of C’s capital by bringing in or withdrawing cash, as the case may be.

Prepare the necessary accounts and the opening balance sheet of the firm.

Hints:

(i) Actual Value of Stock = `40,000 xx 100/125`

= ₹ 32,000

(ii) Actual Value of Building = `75,000 xx 100/75`

= ₹ 1,00,000

X and Y were partners sharing profits and losses in the ratio of 2 : 1 respectively. The following was their balance sheet as at 31st March, 2024:

On 1st April, 2024, Z was admitted to the firm on the following terms:

1. Z would provide ₹ 5,00,000 as his capital and pay ₹ 30,000 as goodwill for his one-third share in future profits.
2. X, Y and Z would share profits equally.
3. Assets are to be revalued as:
   Stock at 20% less; Debtors ₹ 3,20,000; Machinery ₹ 4,50,000; Prepaid Expenses - Nil.
4. Outstanding Expenses were estimated at ₹ 40,000.
5.  A credit purchase of goods for ₹ 30,000 had been omitted from the books, although the goods have been included in stock.
6. Creditors include a contingent liability of ₹ 50,000, which has been decided by the court at ₹ 40,000.
7. Capital accounts of old partners would be adjusted in the profit-sharing ratio on the basis of Z’s capital by bringing in or taking out cash.

Pass necessary journal entries and prepare partners’ capital accounts and the balance sheet of the new firm.

Hints:

1. Credit purchase will be shown on the Debit of Revaluation Ale and will also be added in Creditors.
2. ₹ 10,000 in respect of contingent liability will be shown on the Cr. of the Revaluation A/c and will also be deducted from Creditors.

Amit and Sumit are partners sharing profits and losses in the ratio of 3 : 2. Their Balance Sheet as of 31st March, 2024 is given below:

They decided to admit Puneet as a new partner from 1st April, 2024 on the following terms:

1. Amit will give `1/3`rd of his share and Sumit will give `1/4`th of his share to Puneet.
2. Puneet’s Loan Account will be converted into his Capital.
3. The Goodwill of the firm is valued at ₹ 3,00,000. Puneet will bring in his share of Goodwill in cash and the same was immediately withdrawn by the partners.
4. Land and Building was found undervalued by ₹ 1,00,000.
5. Stock was found overvalued by ₹ 60,000.
6. Provision for Doubtful Debts will be made equal to 5% of Debtors.
7. Investments are to be valued at their market price.

It was decided that the total capital of the firm after admission of the new partner would be ₹ 10,00,000. Capital Accounts of Partners will be readjusted on the basis of their profit-sharing ratio and excess or deficiency will be adjusted in cash.

Prepare (i) Revaluation Account, (ii) Partner’s Capital Accounts, and (iii) Balance Sheet of the firm after the admission of new partner.

P and Q are partners sharing profits and losses in the ratio of 60 : 40. The firm's Balance Sheet as at 31.3.2024 was as follows:

R was admitted as a partner from 1.4.2024 on the following terms:

1. R will be entitled to 40% of the profits. The new profit-sharing ratio of P, Q and R will be 35 : 25 : 40.
2. R will bring in cash ₹ 2,00,000 as capital. It is agreed that goodwill shall be valued on the basis of capitalisation at 8% of the normal average profits of the last three years, which were as follows:
   For the year ended 31.3.2022 Loss ₹ 80,000 (including a loss of ₹ 60,000 due to theft).
   For the year ended 31 .3.2023 Profit ₹ 76,000 (including a speculative profit of ₹ 1,00,000).
   For the year ended 31.3 .2024 Profit ₹ 1,40,000
3. Since R is unable to bring his share of goodwill in cash, it is decided that his current account will be debited from his share of goodwill.
4. A reduction of ₹ 5,000 should be made from the stock in respect of old and unsalable items.
5. There is an additional liability of ₹ 10,000 being outstanding salary payable to employees of the firm. This liability is not included in the outstanding liabilities stated in the above balance sheet.
6. Investments are worthless.
7. A bill for ₹ 2,000 for electric charges has been omitted and is to be accounted for.
8. Capitals are to be adjusted according to the profit-sharing ratio, taking R’s Capital as base, any excess or deficiency to be adjusted in cash.

Prepare journal entries, capital accounts and the opening Balance Sheet of the new firm.

Hint: R’s Current A/c will be debited by his share of Goodwill ₹ 32,000 and P and Q will be credited in their sacrificing ratio of 5 : 3.

A and B are partners in a firm sharing profits in the ratio of 3 : 2. On March 31, 2024, their Balance Sheet showed a general reserve of ₹ 54,000. On that date they decided to admit C as a new partner. The new profit-sharing ratio between A, B and C will be 4 : 3 : 2. Record the necessary journal entry in the books of the firm under the following circumstances:

1. When they want to distribute the general reserve.
2. When they don’t want to distribute the general reserve and prefer to record an adjustment entry for the same.

On 1st April 2024, A and B, sharing profits in the ratio of 7 : 5 admit C for a `1/5`th share in profits, which he acquires equally from A and B. On this date, Profit & Loss Account showed a credit balance of ₹ 45,000. Partners do not want to distribute the profit but prefer to record it by passing an adjustment entry. You are required to give the journal entry.

A and B are partners sharing profits in the ratio of 2 : 3. They admitted C as a new partner. A surrendered `1/5`th of his share and B `1/3`rd of his share in favour of C. On this date, the Profit & Loss Account shows a Dr. Balance of ₹ 75,000 and Advertisement Suspense A/c ₹ 25,000.

Partners do not want to distribute the accumulated losses. You are required to give the adjusting entry.

Rani and Seeta were partners sharing profits in the ratio of 3 : 1. They admitted Mona as a new partner from 1st April, 2024. New profit sharing ratio is agreed at 3 : 2 : 1. On this date, their Balance Sheet disclosed the following items:

Partners decided to record the effect of the above items without affecting their book values. Pass the necessary adjusting entry.

Amrita and Barkha are partners sharing profits in the ratio of 5 : 3. On 1st March, 2024 they admit Fiza as a new partner and the new ratio is agreed at 3 : 1 : 1. On this date their books show a ‘Workmen Compensation Reserve’ of ₹ 1,60,000. Partners do not want to alter the value of any item of Balance Sheet and want to record the effect of admission by passing an adjustment entry. You are required to pass the adjustment entry under the following alternative cases.

1. When there is no claim for Workmen Compensation.
2. When claim for Workmen Compensation is estimated at ₹ 40,000
3. When the claim for Workmen Compensation is estimated at ₹ 1,60,000.
4. When claim for Workmen Compensation is estimated at ₹ 3,00,000

A and B are partners sharing profits and losses in the ratio of 3 : 2. They admit C as a new partner from 1st April, 2024. A surrenders `1/3`rd of his share and B surrenders `1/5`th from his share in favour of C. Following balances appeared in their Balance Sheets as of that date:

Partners decide that the book value of any item in the Balance Sheet is not to be altered but prefer to record the change in profit-sharing ratio by an adjustment entry. Show the adjustment entry under the following alternative cases:

Case 1: If there is no other information

Case 2: If the market value of investments is ₹ 4,35,000

Case 3: If the market value of investments is ₹ 3,50,000

Case 4: If the market value of investments is ₹ 5,00,000

A, B and C are partners sharing profits and losses in the ratio of 9 : 6 : 5. Their Balance Sheet as at 31st March, 2024 was as follows:

D is admitted as a new partner for `1/4`th of the future profits and losses. B sacrifices `1/10`th from his share in favour of D and the rest of the sacrifice was made by A and C in the ratio of 2 : 1. Claim on account of Workmen Compensation is estimated at ₹ 50,000. Market value of investments was ₹ 1,25,000.

Partners do not want to alter the values given in the Balance Sheet but prefer to record the effect of the change in profit-sharing ratio by an adjustment entry. You are required to give the necessary journal entry. Also calculate the new profit-sharing ratio.

A and B are partners sharing profits in the ratio of 7 : 5. Their Balance Sheet as at 31st December, 2023 was as follows:

They admit C as a partner. A sacrifices `1/7`th of his share and B sacrifices `1/6`th from his share in favour of C.

Following terms are agreed upon:

1. Goodwill is valued at ₹ 2,40,000. C brings ₹ 2,00,000 as capital and his share of goodwill in cash.
2. Ravi, an old customer whose account was written off as bad, has promised to pay ₹ 12,000 in full settlement of his account of ₹ 15,000.
3. Provision for doubtful debts to be reduced by ₹ 10,000.
4. Claim on account of Workmen Compensation is ₹ 25,000.
5. Stock is overvalued by 20% and the building is undervalued by 25%.
6. After adjusting the claim of Workmen Compensation from the Workmen Compensation reserve and the difference between the book value and market value of investments from the Investment Fluctuation Reserve, the remaining balance of such reserves, along with all accumulated profits/losses, is to appear in the Balance Sheet of the new firm.

Prepare the Revaluation Account, Partner’s Capital Accounts and the reconstituted Balance Sheet.

Hints:

(i) Sacrifice Ratio 1 : 2; New Ratio 2 : 1 : 1.

(ii)

(iii)

P and Q are partners sharing profits in the ratio of 3 : 2. Following is their Balance Sheet as at 31st March, 2024:

On 1st April, 2024, they agreed to take R as a partner on the following terms:

1. P sacrifices `1/4`th of his share and Q sacrifices `1/20` from his share in favour of R.
2. Goodwill of the firm is valued at ₹ 2,00,000.
3. C brings ₹ 2,50,000 as his capital but brings only 60% of his share of goodwill in cash.
4. Land and Building is undervalued by ₹ 50,000 and stock is overvalued by ₹ 40,000.
5. Claim on account of Workmen Compensation is ₹ 40,000.
6. There is an unrecorded asset worth ₹ 30,000 and the Provision for Doubtful Debts be reduced to ₹ 20,000.
7. Expenses debited in the Profit & Loss Account include a sum of ₹ 25,000 paid for P’s personal life insurance policy.
8. General Reserve is to appear at its original figure in the Balance Sheet of the new firm.

Prepare the Revaluation Account, Partner’s Capital Accounts and Balance Sheet of the new firm.

Hints:

Rekha, Sunita and Teena are partners in a firm sharing profits in the ratio of 3 : 2 : 1. Samiksha joins the firm. Rekha surrenders `1/4`th of her share; Sunita surrenders `1/3`rd of her share and Teena `1/5`th of her share in favour of Samiksha. Find the new profit-sharing ratio.

Calculate sacrificing ratios in the following cases:

1. X and Y are sharing profits in the ratio of 4 : 3. Z joins and the new ratios are 7 : 4 : 3.
2. X and Y are sharing profits in the ratio of 7 : 5. Z joins and the new ratios are 13 : 7 : 4.
3. A and B are sharing profits in the ratio of 5 : 3. C joins and the new ratios are 4 : 2 : 1.
4. A and B are sharing profits in the ratio of 3 : 2. C joins and the new ratios are 5 : 3 : 2.

Calculate new ratios and sacrificing ratios in the following cases:

1. A, B and C are partners sharing profits in the ratio of 4 : 3 : 2. D is admitted for `1/3`rd share.
2.  A, B and C are partners sharing profits in the ratio of `1/2`, `1/3` and `1/6`. D is admitted for a `1/6`th share of profits.
3. A, B and C are partners sharing profits in the ratio of `6/14`, `5/14`, and `3/14`. D is admitted for `1/8`th share of profits.

Kabir and Farid are partners in a firm sharing profits in the ratio of 3 : 1 on 1-4-2019 they admitted Manik into partnership for `1/4`th share in the profits of the firm. Manik brought his share of goodwill premium in cash. Goodwill of the firm was valued on the basis of 2 years’ purchase of the last three years’ average profits. The profits of the last three years were:

During the year 2018-19, there was a loss of ₹ 20,000 due to fire, which was not accounted for while calculating the profit. Calculate the value of goodwill and pass the necessary journal entries for the treatment of goodwill.

Hint: Loss due to fire of ₹ 20,000 will be ignored since it has not been considered while calculating the profit.

Lucy, Rahul and Sanjay are partners sharing profits and losses in the ratio of 1 : 2 : 3. Arun is admitted as a partner who brings in ₹ 20,000 as his capital for a `1/5`th share in the profit. Goodwill of the firm is to be valued at an average of the last three years’ profits, which were ₹ 25,000, ₹ 28,000 and ₹ 37,000 respectively. Arun is unable to bring in cash towards his share of the premium of goodwill.

Give the journal entries if goodwill already appears in the books at ₹ 24,000.

A and B are partners sharing profits in the ratio of 3 : 2. They admit C into partnership; C pays a premium of ₹ 60,000 for a `1/4`th share of profit. The new ratio is 3 : 3 : 2. Goodwill account appears in the books at ₹ 2,00,000. Give the necessary Journal entries.

Asha and Aditi are partners in a firm sharing profits and losses in the ratio of 3 : 2. They admit Raghav as a partner for `1/4`th share in the profits of the firm. Raghav brings ₹ 6,00,000 as his capital and his share of goodwill in cash. Goodwill of the firm is to be valued at two years’ purchase of average profits of the last four years.
The profits of the firm during the last four years are given below:

The following additional information is given:

1. To cover management cost an annual charge of ₹ 56,250 should be made for the purpose of valuation of goodwill.
2. The closing stock for the year ended 31.3.2017 was overvalued by ₹ 15,000.

Pass necessary journal entries on Raghav’s admission showing the working notes clearly.

Hints:

A management cost of ₹ 56,250 will be deducted from each year’s profit.

Overvaluation of Closing Stock will be deducted from the profit of 2016-17.

A and B are partners sharing profits in the ratio of 5 : 3. They admit C as a partner for a `1/3`rd share. His share of Goodwill is ₹ 32,000. Give journal entries in the following cases:

1. When the amount of goodwill is paid privately.
2. When the goodwill is received in cash and retained in the business.
3. When the goodwill is received in cash and withdrawn by old partners.
4. When C is unable to bring the goodwill in cash.

Hint:

In case (a) there will be no entry for goodwill.
In case (b) and (c), Premium A/c will be debited by ₹ 32,000 and the Capital A/cs of A and B will be credited in 5 : 3.
In case (d) Current A/c of C will be debited by ₹ 32,000, and the capital A/cs of A and B will be credited in 5 : 3.

A and B are partners sharing profits in the ratio of 2 : 1. They admit C for a `1/4`th share in profits. C brings in ₹ 30,000 for his capital and ₹ 8,000 out of his share of ₹ 10,000 for goodwill. Before admission, goodwill appeared in books at ₹ 18,000. Give Journal entries to give effect to the above arrangement.

Hints:

1. Goodwill of ₹ 18,000 written off by A and B in 2 : 1.
2. Goodwill of ₹ 8,000 brought in cash by C will be credited to the Premium for Goodwill A/c.
3. Premium for Goodwill A/c will be debited by ₹ 8,000 and C’s Current A/c will be debited by ₹ 2,000 and the Capital Accounts of A and B will be credited in 2 : 1.

A and B are partners sharing profits in the ratio of 3 : 2. Their Balance Sheet stood as under as at 31st August, 2024:

On that date C is admitted as a partner. A sacrifices `1/3` of his share and B `1/10` from his share in favour of C. Following terms are agreed upon:

1. Goodwill is valued at ₹ 1,50,000. C is to bring in his share of goodwill in cash.
2. Provision for Doubtful Debts is to be 5% of debtors.
3. Outstanding rent amounted to ₹ 25,000 and prepaid insurance to ₹ 13,000.
4. Building is to be increased to ₹ 5,00,000 and Stock by ₹ 25,000.
5. C is to contribute ₹ 3,50,000 as his capital.

Prepare the Revaluation Account, Partner’s Capital Accounts and the Balance Sheet of the new firm.

A and B share the profits of a business in the ratio of 5 : 3. They admit C into the firm for a `1/4`th share in the profits to be contributed equally by A and B. On the date of admission of C, the Balance Sheet of the firm was as follows:

Terms of C’s admission were as follows:

1. C will bring ₹ 3,30,000 for his share of capital and goodwill.
2. Goodwill of the firm has been valued at 4 years’ purchase of the average super profits of the last three years. Average profits of the last three years are ₹ 2,20,000 while the normal profits that can be earned with the capital employed are ₹ 1,40,000.
3. Furniture is to be appreciated by ₹ 60,000 and the value of stock is to be reduced by ₹ 20,000.
4. Outstanding Expenses will be paid off.

Prepare Revaluation Account, Partners’ Capital Accounts and the new Balance Sheet of A, B and C.

A and B are partners in a firm sharing profits and losses as 5 : 3. The position of the firm as at 31st March, 2024 was as follows:

On 1st April, 2024 C joins them on the condition that he will share `3/4`th of the future profits, the balance of profits being shared by A and B as 5 : 3. He introduces ₹ 40,000 by way of capital and a further ₹ 4,000 by way of premium for goodwill. He also provides a loan to the firm to pay off the bank overdraft. A and B agree to depreciate Plant by 10% and to raise a provision against Sundry Debtors @ 5%.

You are asked to journalise the entries in the books of the firm and show the resultant Balance Sheet. How will the partners share future profits?

Hint: Instead of Bank Overdraft, C’s Loan A/c will be shown on the liabilities side of the opening Balance Sheet. Following entry will be passed for it:

A and B are partners in a firm. Their Balance Sheet as at 31st March, 2024 was as follows:

C was taken into partnership as of 1st April, 2024 on the following terms for a `1/6` share:

1. C will bring ₹ 40,000 as his capital.
2. Goodwill is valued at ₹ 12,000 and the admitting partner is unable to bring his share of goodwill in cash.
3. Claim on account of Workmen’s Compensation is ₹ 3,000.
4. Creditors are to be paid ₹ 2,000 more.
5. A 2% Provision for Discount on Debtors is required.
6. The share of A in the new firm will be `1 1/2` times that of B.

Prepare the Revaluation A/c, Capital Accounts and Balance Sheet.

The Balance Sheet of A and B as at 31st March, 2024 is given below:

A and B share profits and losses in the ratio of 2 : 1. On 1st April, 2024 they agree to admit P into the firm subject to the following terms and conditions:

1. P will bring in ₹ 21,000 of which ₹ 9,000 will be treated as his share of Goodwill to be retained in the business.
2. P will be entitled to `1/4` share of the profits of the firm.
3. 50% of the General Reserve is to remain as a provision for bad and doubtful debts.
4. Furniture is to be depreciated by 5%.
5. Stock is to be revalued at ₹ 10,500.

Prepare the Revaluation Account, Capital Accounts and Opening Balance Sheet of the new firm.

Hint: Entry for General Reserve will be:

A and B are partners sharing profits and losses in the ratio of 3 : 2. On April 1, 2024, their Balance Sheet was as follows:

On this date they agree to admit C on the following terms:

1. C will be entitled to a `3/10` share in the profits, which he acquires `1/5` from A and `1/10` from B. He will bring in ₹ 60,000 as his capital.
2. Goodwill of the firm was valued at ₹ 40,000.
3. Plant is valued at ₹ 60,000 and Stock at ₹ 70,000.
4. Claim on account of Workmen’s Compensation is ₹ 6,000.
5. Patents should be written off.
6. Investments of ₹ 5,000 which did not appear in the books, should be duly recorded.
7. B is to withdraw ₹ 20,000 in cash.

Give journal entries and the Balance Sheet of the new firm.

Hints:

1. Goodwill already appearing in the assets will be written off between the old partners in their old ratio.
2. Following entry will be passed in respect of Workmen Compensation:
   

   Workmen Compensation Reserve A/c   ...Dr.	4,000
   Revaluation A/c   ...Dr.	2,000
   To Liability for Workmen Compensation Claim A/c		6,000

   Liability for Workmen Compensation Claim will appear on the liabilities side of the Balance Sheet at  ₹ 6,000.

Note: C’s Current Ale has been debited from his share of goodwill.

A and B were partners with fixed capitals of ₹ 3,70,000 each. They admitted C as a new partner for a `1/4`th share of profits. C brought ₹ 3,00,000 as his capital and the necessary amount of goodwill premium for his share of goodwill. The new profit-sharing ratio will be 2 : 1 : 1.

Pass necessary journal entries for the above transactions in the books of the firm.

A, B and C were partners in a firm sharing profits in the ratio of 2 : 1 : 2. Their respective fixed capitals were A ₹ 7,00,000, B ₹ 4,50,000 and C ₹ 6,00,000. On 31st March, 2024, they admitted Divya as a new partner for a `1/5`th share in the profits. Their new profit-sharing ratio was 1 : 2 : 1 : 1. Divya brought ₹ 5,00,000 as her capital and the necessary amount for her share of the goodwill premium.

Pass necessary journal entries for the above transactions in the books of the firm on Divya’s admission.

A, B and C are partners sharing profits and losses in the ratio of 6 : 3 : 1. Their respective capitals are A ₹ 5,00,000; B ₹ 4,00,000 and C ₹ 2,00,000. They decide to admit D into partnership and the new profit-sharing ratio is agreed at 3 : 3 : 3 : 1.

D brings ₹ 1,50,000 as his capital and his share of goodwill in cash. At the time of D's admission:

1. The firm had a Workmen Compensation Reserve of ₹ 1,00,000 against which there was a claim of ₹ 1,20,000.
2. Advertisement The Suspense A/c (Dr.) balance appeared in their books at ₹ 30,000.
3. Contingency Reserve appeared at ₹ 60,000.

You are required to prepare necessary journal entries.

David and Bimal are partners sharing profits and losses in the ratio of 3 : 2. Their Balance Sheet as at 31st March 2024, was as follows:

They admitted Chander as a new partner on 1-4-2024 and the new profit-sharing ratio became 5 : 3 : 2. Chander introduced a capital of ₹ 1,60,000. Chander was unable to bring any cash for goodwill and so it was decided to value the goodwill on the basis of his share in the profits and the capital contributed by him. Adjustment for the same should be made through a current account opened in the name of Chander. The following reevaluations were made at the time of Chander’s admission:

1. Stock had been overvalued by ₹ 7,500 and furniture by ₹ 5,000.
2. Provision for doubtful debts to be increased by ₹ 1,000.
3. A creditor for ₹ 23,500 was paid off by Bimal privately for which no entry was passed in the books of the firm.

Prepare the Revaluation Account, Partner’s Capital Accounts and a Balance Sheet of the new firm on the date of Chander’s admission. Show your workings clearly.

Hint: Hidden Goodwill ₹ 3,00,000.

Leena and Rohit are partners in a firm sharing profits in the ratio of 3 : 2. On 31st March, 2018, their Balance Sheet was as follows:

On the above date Manoj was admitted as a new partner for `1/5`th share in the profits of the firm on the following terms:

1. Manoj brought proportionate capital. He also brought his share of the goodwill premium of ₹ 80,000 in cash.
2. 10% of the general reserve was to be transferred to provision for doubtful debts.
3. Claim on account of workmen’s compensation amounted to ₹ 40,000.
4. Stock was overvalued by ₹ 16,000.
5. Leena, Rohit and Manoj will share future profits in the ratio of 5 : 3 : 2.

Prepare the Revaluation Account, the Partners’ Capital Accounts and the Balance Sheet of the reconstituted firm.

Shikha, Shweta and Manisha were partners sharing profits and losses in the ratio of 5 : 3 : 2. They admitted Pooja into partnership for a 25% share. Shikha, Shweta and Manisha decided to share future profits and losses equally. Pooja brings in Capital of ₹ 8,00,000 and ₹ 1,50,000 out of her goodwill share of ₹ 2,50,000. Pass necessary entries at the time of Pooja’s admission.

On 31st March, 2019 the Balance Sheet of Madan and Mohan who share profits and losses in the ratio of 3 : 2 was as follows:

They decided to admit Gopal on 1st April, 2019 for `1/5`th share, which Gopal acquired wholly from Mohan on the following terms:

1. Gopal shall bring ₹ 10,000 as his share of the premium for Goodwill.
2. A debtor whose dues of ₹ 3,000 were written off as bad debt paid ₹ 2,000 in full settlement.
3. A claim of ₹ 5,000 on account of workmen’s compensation was to be provided for.
4. Patents were undervalued by ₹ 2,000. Stock in the books was valued 10% more than its market value.
5. Gopal was to bring in capital equal to 20% of the combined capitals of Madan and Mohan after all adjustments.

Prepare the Revaluation Account, the Capital Accounts of the Partners and the Balance Sheet of the new firm.

Neha and Tara are partners in a firm sharing profits and losses in the ratio of 3 : 2. Their Balance Sheet as at 31st March, 2012, stood as follows:

They agreed to admit prachi into partnership for `1/5`th share of profits on 1st April, 2012, on the following terms:

1. All debtors are to be considered as good and therefore the provision for doubtful debts is to be written back.
2. Value of the land and building is to be written upto ₹ 18,000.
3. Value of the plant and machinery is to be written down by ₹ 2,000.
4. The liability against the Workmen’s Compensation Fund is determined at ₹ 2,000 which is to be paid later in the year.
5. Prachi is to bring in her share of Goodwill of ₹ 10,000 in cash.
6. She will further bring in cash so as to make her capital equal to 20% of the total capital of the new firm: (Show your workings clearly).

You are required to prepare:

1. Revaluation Account.
2. Partners’ Capital Accounts.
3. Balance Sheet of the reconstituted firm.

Hint: Provision for Doubtful Debts will be shown on the Cr. side of Revaluation Account and Debtors will be shown in the Balance Sheet at ₹ 19,000.

Balance Sheet as at 31st March, 2024 of Ramesh, Kumar and Pappu, who were sharing profits and losses in the ratio of 2 : 3 : 5.

On 1st April, 2024 they admit Shilpa into partnership on the following terms:

1. Furniture, Investments and Machinery to be reduced by 15%.
2. The value of stock to be taken is at ₹ 48,000.
3. Shilpa will bring in ₹ 26,000 as her share of goodwill.
4. Shilpa to bring ₹ 32,000 towards capital for a `1/6`th share and old partners to adjust their capitals accordingly.
5. Outstanding rent amounted to ₹ 1,800.
6. Prepaid salaries ₹ 800.
7. Adjustments of capital to be made by cash.

Prepare Revaluation Account, Capital Accounts, Cash Account and the Balance Sheet of the new firm.

On 31-3-2024 the Balance Sheet of W and R, who shared profits in 3 : 2 ratio was as follows:

On 1st April, 2024 B was admitted as a partner on the following conditions:

1. B will get `4/15`th share of profits.
2. B had to bring ₹ 30,000 as his capital, to which amount other Partners capitals shall have to be adjusted.
3. He would pay cash for his share of goodwill, which would be based on `2 1/2` years’ purchase of average profits of the past 4 years.
4. The assets would be revalued as under:
   Sundry debtors at book value, less 5% provision for bad debts. Stock at ₹ 20,000, Plant and Machinery at ₹ 40,000.
5. The profits of the firm for the years 2021, 2022, and 2023 were ₹ 20,000, ₹ 14,000, and 17,000, respectively.

Prepare the Revaluation Account, Partner’s Capital Accounts, and the Balance Sheet of the new firm.

Hint:

Average Profits = `(20,000 + 14,000 + 17,000 + 15,000  "(Given in Balance Sheet)")/4`

= ₹ 16,500

Value of Goodwill = `16,500 xx 2 1/2`

= ₹ 41,250

B’s Share in Goodwill = `41,250 xx 4/15`

= ₹ 11,000

A and B are partners sharing profits in the ratio of 2 : 3. Their balance sheet as at 31st March, 2024 was as follows:

On 1st April, 2024 they admitted C for a `1/5` share in profits, which he acquires wholly from B. The other terms of agreement were:

1. Goodwill of the firm was to be valued at two years’ purchase of the average of the last 3 years’ profits. The profits for the last 3 years were ₹ 58,000, ₹ 66,000, and ₹ 56,000 respectively.
2. Provision for Doubtful debts was found in excess by ₹ 2,000.
3. Buildings were found undervalued by ₹ 20,000 and furniture overvalued by ₹ 5,000.
4. ₹ 5,000 for damages claimed by a customer had been disputed by the firm. It was agreed at ₹ 2,000 by a compromise between the customer and the firm.
5. C was to bring in ₹ 60,000 as his capital and the necessary amount for his share of goodwill.
6. Capitals of A and B were to be adjusted in the new profit-sharing ratio by opening necessary current accounts.

Prepare journal entries, capital accounts and the opening balance sheet.

Hint: No entry will be passed for ₹ 5,000. Only the following entry will be passed in respect of damages:

A and B are in partnership sharing profits and losses in the proportion of three-fourths and one-fourth, respectively. Their Balance Sheet as at 31st March, 2022 was as follows:

On 1st April, 2022 they admitted C into partnership on the following terms:

1. C to purchase one-third of the goodwill for ₹ 20,000 and provide ₹ 1,00,000 as capital.
2. Future profits and losses are to be shared by A, Band C equally.
3. Plant and Machinery is to be reduced by 10% and ₹ 5,000 is to be provided for estimated bad debts. Stock is to be taken at a valuation of ₹ 2,49,400.
4. By bringing in or withdrawing cash, the capitals of A and B are to be made proportionate to that of Con on their profit-sharing basis.

Set out entries relating to the above arrangement in the firm’s Journal, give the partners’ Capital Accounts in tabular form and submit the opening Balance Sheet of the new firm.

Hint: A sacrifices `5/12`; B gains `1/12`. B will also compensate A for acquiring a `1/12` share. Amount of compensation on the basis of the premium paid by C will be ₹ 5,000.

A and B are partners in a firm sharing profits and losses in the ratio of 4 : 1, their Balance Sheet as at 3 lst March, 2022 is as follows: