# NCERT solutions for Class 12 Accountancy - Not-for-profit Organisation and Partnership Accounts chapter 3 - Reconstitution of a Partnership Firm – Admission of a Partner [Latest edition]

## Chapter 3: Reconstitution of a Partnership Firm – Admission of a Partner

Questions for Practice
Questions for Practice [Pages 158 - 165]

### NCERT solutions for Class 12 Accountancy - Not-for-profit Organisation and Partnership Accounts Chapter 3 Reconstitution of a Partnership Firm – Admission of a Partner Questions for Practice [Pages 158 - 165]

#### Short Answer Questions

Questions for Practice | Q 1 | Page 158

Identify various matters that need adjustments at the time of admission of a new partner.

Questions for Practice | Q 2 | Page 158

Why i is it necessary to ascertain new profit sharing ratio even for old partners when a new partner is admitted?

Questions for Practice | Q 3 | Page 158

What is sacrificing ratio? Why is it calculated?

Questions for Practice | Q 4 | Page 158

On what occasions sacrificing ratio is used?

Questions for Practice | Q 5 | Page 158

If some goodwill already exists in the books and the new partner brings in his share of goodwill in cash, how will you deal with existing amount of goodwill?

Questions for Practice | Q 6 | Page 158

Why is there need for the revaluation of assets and liabilities on the admission of a partner?

#### Long Answer Questions

Questions for Practice | Q 1 | Page 159

Do you advise that assets and liabilities must be revalued at the time of admission of a partner? If so, why? Also describe how is this treated in the book of account?

Questions for Practice | Q 2 | Page 159

What is goodwill? What are the factors that effect goodwill?

Questions for Practice | Q 3 | Page 159

Explain various methods of valuation of goodwill.

Questions for Practice | Q 4 | Page 159

If it is agreed that the capital of all the partners be proportionate to the new profit sharing ratio, how will you work out the new capital of each partner? Give examples and state how necessary adjustments will be made.

Questions for Practice | Q 5 | Page 159

Explain how will you deal with goodwill when new partner is not in a position to bring his share of goodwill in cash ?

Questions for Practice | Q 6 | Page 159

Explain various methods for the treatment of goodwill on the admission of a new partner?

Questions for Practice | Q 7 | Page 159

How will you deal with the accumulated profit and losses and reserves on the admission of a new partner?

Questions for Practice | Q 8 | Page 159

At what figures the value of assets and liabilities appear in the books of the firm after revaluation has been done? Show with the help of an imaginary balance sheet.

#### Numerical Questions

Questions for Practice | Q 1 | Page 159

A and B were partners in a firm sharing profits and losses in the ratio of 3:2. They admit C into the partnership with 1/6 share in the profits. Calculate the new profit sharing ratio?

Questions for Practice | Q 2 | Page 159

A, B, C were partners in a firm sharing profits in 3:2:1 ratio. They admitted D for 10% profits. Calculate the new profit sharing ratio?

Questions for Practice | Q 3 | Page 159

X and Y are partners sharing profits in 5:3 ratio admitted Z for 1/10 share which he acquired equally for X and Y. Calculate new profit sharing ratio?

Questions for Practice | Q 4 | Page 159

A, B and C are partners sharing profits in 2:2:1 ratio admitted D for 1/8 share which he acquired entirely from A. Calculate new profit sharing ratio?

Questions for Practice | Q 5 | Page 159

P and Q are partners sharing profits in 2:1 ratio. They admitted R into partnership giving him 1/5 share which he acquired from P and Q in 1:2 ratio. Calculate new profit sharing ratio?

Questions for Practice | Q 6 | Page 159

A, B and C are partners sharing profits in 3:2:2 ratio. They admitted D as a new partner for 1/5 share which he acquired from A, B and C in 2:2:1 ratio respectively. Calculate new profit sharing ratio?

Questions for Practice | Q 7 | Page 160

A and B were partners in a firm sharing profits in 3:2 ratio. They admitted C for 3/7 share which he took 2/7 from A and 1/7 from B. Calculate new profit sharing ratio?

Questions for Practice | Q 8 | Page 160

A, B and C were partners in a firm sharing profits in 3:3:2 ratio. They admitted D as a new partner for 4/7 profit. D acquired his share 2/7 from A. 1/7 from B and 1/7 from C. Calculate new profit sharing ratio?

Questions for Practice | Q 9 | Page 160

Radha and Rukmani are partners in a firm sharing profits in 3:2 ratio. They admitted Gopi as a new partner. Radha surrendered 1/3 of her share in favour of Gopi and Rukmani surrendered 1/4 of her share in favour of Gopi. Calculate new profit sharing ratio?

Questions for Practice | Q 10 | Page 160

Singh, Gupta and Khan are partners in a firm sharing profits in 3:2:3 ratio. They admitted Jain as a new partner. Singh surrendered 1/3 of his share in favour of Jain: Gupta surrendered 1/4 of his share in favour of Jain and Khan surrendered 1/5 in favour of Jain. Calculate new profit sharing ratio?

Questions for Practice | Q 11 | Page 160

Sandeep and Navdeep are partners in a firm sharing profits in 5:3 ratio. They admit C into the firm and the new profit sharing ratio was agreed at 4:2:1. Calculate the sacrificing ratio?

Questions for Practice | Q 12 | Page 160

Rao and Swami are partners in a firm sharing profits and losses in 3:2 ratio. They admit Ravi as a new partner for 1/8 share in the profits. The new profit sharing ratio between Rao and Swami is 4:3. Calculate new profit sharing ratio and sacrificing ratio?

Questions for Practice | Q 13 | Page 160

Compute the value of goodwill on the basis of four years’ purchase of the average profits based on the last five years? The profits for the last five years were as follows:

 Rs. 2013 40,000 2014 50,000 2015 60,000 2016 50,000 2017 60,000
Questions for Practice | Q 14 | Page 160

Capital employed in a business is Rs. 2,00,000. The normal rate of return on capital employed is 15%. During the year 2015 the firm earned a profit of Rs. 48,000. Calculate goodwill on the basis of 3 years purchase of super profit?

Questions for Practice | Q 15 | Page 160

The books of Ram and Bharat showed that the capital employed on 31.12.2016 was Rs. 5,00,000 and the profits for the last 5 years : 2015 Rs. 40,000; 2014 Rs. 50,000; 2013 Rs. 55,000; 2012 Rs. 70,000 and 2011 Rs. 85,000. Calculate the value of goodwill on the basis of 3 years purchase of the average super profits of the last 5 years assuming that the normal rate of return is 10%?

Questions for Practice | Q 16 | Page 161

Rajan and Rajani are partners in a firm. Their capitals were Rajan Rs. 3,00,000; Rajani Rs. 2,00,000. During the year 2015 the firm earned a profit of Rs. 1,50,000. Calculate the value of goodwill of the firm assuming that the normal rate of return is 20%?

Questions for Practice | Q 17 | Page 161

A business has earned average profits of Rs. 1,00,000 during the last few years. Find out the value of goodwill by capitalisation method, given that the assets of the business are Rs. 10,00,000 and its external liabilities are Rs. 1,80,000. The normal rate of return is 10%?

Questions for Practice | Q 18 | Page 161

Verma and Sharma are partners in a firm sharing profits and losses in the ratio of 5:3. They admitted Ghosh as a new partner for 1/5 share of profits. Ghosh is to bring in Rs. 20,000 as capital and Rs. 4,000 as his share of goodwill premium. Give the necessary journal entries:
a) When the amount of goodwill is retained in the business.
b) When the amount of goodwill is fully withdrawn.
c) When 50% of the amount of goodwill is withdrawn.
d) When goodwill is paid privately.

Questions for Practice | Q 19 | Page 161

A and B are partners in a firm sharing profits and losses in the ratio of 3:2. They decide to admit C into partnership with 1/4 share in profits. C will bring in Rs. 30,000 for capital and the requisite amount of goodwill premium in cash. The goodwill of the firm is valued at Rs, 20,000. The new profit sharing ratio is 2:1:1. A and B withdraw their share of goodwill. Give necessary journal entries?

Questions for Practice | Q 20 | Page 161

Arti and Bharti are partners in a firm sharing profits in 3:2 ratio, They admitted Sarthi for 1/4 share in the profits of the firm. Sarthi brings Rs. 50,000 for his capital and Rs. 10,000 for his 1/4 share of goodwill. Goodwill already appears in the books of Arti and Bharti at Rs. 5,000. the new profit sharing ratio between Arti, Bharti and Sarthi will be 2:1:1. Record the necessary journal entries in the books of the new firm?

Questions for Practice | Q 21 | Page 161

X and Y are partners in a firm sharing profits and losses in 4:3 ratio. They admitted Z for 1/8 share. Z brought Rs. 20,000 for his capital and Rs. 7,000 for his 1/8 share of goodwill. Subsequently X, Y and Z decided to show goodwill in their books at Rs. 40,000. Show necessary journal entries in the books of X, Y and Z?

Questions for Practice | Q 22 | Page 161

Aditya and Balan are partners sharing profits and losses in 3:2 ratio. They admitted Christopher for 1/4 share in the profits. The new profit sharing ratio agreed was 2:1:1. Christopher brought Rs. 50,000 for his capital. His share of goodwill was agreed to at Rs. 15,000. Christopher could bring only Rs. 10,000 out of his share of goodwill. Record necessary journal entries in the books of the firm?

Questions for Practice | Q 23 | Page 162

Amar and Samar were partners in a firm sharing profits and losses in 3:1 ratio. They admitted Kanwar for 1/4 share of profits. Kanwar could not bring his share of goodwill premium in cash. The Goodwill of the firm was valued at Rs. 80,000 on Kanwar’s admission. Record necessary journal entry for goodwill on Kanwar’s admission.

Questions for Practice | Q 24 | Page 162

Mohan Lal and Sohan Lal were partners in a firm sharing profits and losses in 3:2 ratio. They admitted Ram Lal for 1/4 share on 1.1.2013. It was agreed that goodwill of the firm will be valued at 3 years purchase of the average profits of last 4 years which were Rs. 50,000 for 2013, Rs. 60,000 for 2014, Rs. 90,000 for 2015 and Rs. 70,000 for 2016. Ram Lal did not bring his share of goodwill premium in cash. Record the necessary journal entries in the books of the firm on Ram Lal’s admission when:
a) Goodwill already appears in the books at Rs. 2,02,500.
b) Goodwill appears in the books at Rs. 2,500.
c) Goodwill appears in the books at Rs. 2,05,000.

Questions for Practice | Q 25 | Page 162

Rajesh and Mukesh are equal partners in a firm. They admit Hari into partnership and the new profit sharing ratio between Rajesh, Mukesh and Hari is 4:3:2. On Hari’s admission goodwill of the firm is valued at Rs 36,000. Hari is unable to bring his share of goodwill premium in cash. Rajesh, Mukesh and Hari decided not to show goodwill in their balance sheet. Record necessary journal entries for the treatment of goodwill on Hari’s admission.

Questions for Practice | Q 26 | Page 162

Amar and Akbar are equal partners in a firm. They admitted Anthony as a new partner and the new profit sharing ratio is 4:3:2. Anthony could not bring this share of goodwill Rs 45,000 in cash. It is decided to do adjustment for goodwill without opening goodwill account. Pass the necessary journal entry for the treatment of goodwill?

Questions for Practice | Q 27 | Page 162

Given below is the Balance Sheet of A and B, who are carrying on partnership business on 31.12.2016. A and B share profits and losses in the ratio of 2:1.

Balance Sheet of A and B as on December 31, 2016

 Liabilites Amount (Rs) Assets Amount (Rs) Bills Payable 10,000 Cash in Hand 10,000 Creditors 58,000 Cash at Bank 40,000 Outstanding 2,000 Sundry Debtors 60,000 Expenses - Stock 40,000 Capitals: Plant 1,00,000 A 1,80,000 Buildings 1,50,000 B 1,50,000 3,30,000 4,00,000 4,00,000

C is admitted as a partner on the date of the balance sheet on the following terms:
(i) C will bring in Rs 1,00,000 as his capital and Rs 60,000 as his share of goodwill for 1/4 share in the profits.
(ii) Plant is to be appreciated to Rs 1,20,000 and the value of buildings is to be appreciated by 10%.
(iii) Stock is found over valued by Rs 4,000.
(iv) A provision for bad and doubtful debts is to be created at 5% of debtors.
(v) Creditors were unrecorded to the extent of Rs 1,000.
Pass the necessary journal entries, prepare the revaluation account and partners’ capital accounts, and show the Balance Sheet after the admission of C.

Questions for Practice | Q 28 | Page 163

Leela and Meeta were partners in a firm sharing profits and losses in the ratio of 5:3. In April 2017 they admitted Om as a new partner. On the date of Om’s admission the balance sheet of Leela and Meeta showed a balance of Rs 16,000 in general reserve and Rs 24,000 (Cr) in Profit and Loss Account. Record necessary journal entries for the treatment of these items on Om’s admission. The new profit sharing ratio between Leela, Meeta and Om was 5:3:2.

Questions for Practice | Q 29 | Page 163

Amit and Viney are partners in a firm sharing profits and losses in 3:1 ratio. On 1.1.2017 they admitted Ranjan as a partner. On Ranjan’s admission the profit and loss account of Amit and Viney showed a debit balance of Rs 40,000. Record necessary journal entry for the treatment of the same.

Questions for Practice | Q 30 | Page 163

A and B share profits in the proportions of 3/4 and 1/4. Their Balance Sheet on March 31, 2016 was as follows:

 Balance Sheet of A and B as on March 31, 2016 Liabilites Amount (Rs) Assets Amount (Rs) Sundry creditors 41,500 Cash at Bank 26,500 Reserve fund 4,000 Bills Receivable 3,000 Capital Accounts Debtors 16,000 A 30,000 Stock 20,000 B 16,000 Fixtures 1,000 Land & Building 25,000 91,500 91,500

On April 1,2017, C was admitted into partnership on the following terms:

1. That C pays Rs 10,000 as his capital.
2. That C pays Rs 5,000 for goodwill. Half of this sum is to be withdrawn by A and B.
3. That stock and fixtures be reduced by 10% and a 5%, provision for doubtful debts be created on Sundry Debtors and Bills Receivable.
4. That the value of land and buildings be appreciated by 20%.
5. There being a claim against the firm for damages, a liability to the extent of Rs 1,000 should be created.
6. An item of Rs 650 included in sundry creditors is not likely to be claimed and hence should be written back.

Record the above transactions (journal entries) in the books of the firm assuming that the profit sharing ratio between A and B has not changed. Prepare the new Balance Sheet on the admission of C.

Questions for Practice | Q 31 | Page 164

A and B are partners sharing profits and losses in the ratio of 3:1. On Ist Apr. 2017 they admitted C as a new partner for 1/4 share in the profits of the firm. C brings Rs 20,000 as for his 1/4 share in the profits of the firm. The capitals of A and B after all adjustments in respect of goodwill, revaluation of assets and liabilities, etc. has been worked out at Rs 50,000 for A and Rs 12,000 for B. It is agreed that partner’s capitals will be according to new profit sharing ratio. Calculate the new capitals of A and B and pass the necessary journal entries assuming that A and B brought in or withdrew the necessary cash as the case may be for making their capitals in proportion to their profit sharing ratio?

Questions for Practice | Q 32 | Page 164

Pinky, Qumar and Roopa partners in a firm sharing profits and losses in the ratio of 3:2:1. S is admitted as a new partner for 1/4 share in the profits of the firm, whichs he gets 1/8 from Pinky, and 1/16 each from Qmar and Roopa. The total capital of the new firm after Seema’s admission will be Rs 2,40,000. Seema is required to bring in cash equal to 1/4 of the total capital of the new firm. The capitals of the old partners also have to be adjusted in proportion of their profit sharing ratio. The capitals of Pinky, Qumar and Roopa after all adjustments in respect of goodwill and revaluation of assets and liabilities have been made are Pinky Rs 80,000, Qumar Rs 30,000 and Roopa Rs 20,000. Calculate the capitals of all the partners and record the necessary journal entries for doing adjustments in respect of capitals according to the agreement between the partners?

Questions for Practice | Q 33 | Page 164

The following was the Balance Sheet of Arun, Bablu and Chetan sharing profits and losses in the ratio of 6/14 : 5/14 : 3/14 respectively.

 Liabilites Amount (Rs) Assets Amount (Rs) Creditors 9,000 Land and Buildings 24,000 Bills Payable 3,000 Furniture 3,500 Capital Accounts Stock 14,000 Arun 19,000 Debtors 12,600 Bablu 16,000 Cash 900 Chetan 8,000 43,000 55,000 55,000

They agreed to take Deepak into partnership and give him a share of 1/8 on the following terms:
(a) that Deepak should bring in Rs 4,200 as goodwill and Rs 7,000 as his Capital;
(b) that furniture be depreciated by 12%;
(c) that stock be depreciated by 10% ;
(d) that a Reserve of 5% be created for doubtful debts;
(e) that the value of land and buildings having appreciated be brought upto Rs 31,000;
(f) that after making the adjustments the capital accounts of the old partners (who continue to share in the same proportion as before) be adjusted on the basis of the proportion of Deepak’s Capital to his share in the business, i.e., actual cash to be paid off to, or brought in by the old partners as the case may be.

Prepare Cash Account, Profit and Loss Adjustment Account (Revaluation Account) and the Opening Balance Sheet of the new firm.

Questions for Practice | Q 34 | Page 165

Azad and Babli are partners in a firm sharing profits and losses in the ratio of 2:1. Chintan is admitted into the firm with 1/4 share in profits. Chintan will bring in Rs 30,000 as his capital and the capitals of Azad and Babli are to be adjusted in the profit sharing ratio. The Balance Sheet of Azad and Babli as on March 31, 2016 (before Chintan’s admission) was as follows:

 Balance Sheet of A and B as on 31.03.2016 Liabilites Amount (Rs) Assets Amount (Rs) Creditors 8,000 Cash in hand 2,000 Bills payable 4,000 Cash at bank 10,000 General reserve 6,000 Sundry debtors 8,000 Capital accounts: Stock 10,000 Azad 50,000 Funiture 5,000 Babli 32,000 82,000 Machinery 25,000 Buildings 40,000 1,00,000 1,00,000

It was agreed that
i) Chintan will bring in Rs 12,000 as his share of goodwill premium.
ii) Buildings were valued at Rs 45,000 and Machinery at Rs 23,000.
iii) A provision for doubtful debts is to be created @ 6% on debtors.
iv) The capital accounts of Azad and Babli are to be adjusted by opening current accounts.
Record necessary journal entries, show necessary ledger accounts and prepare the Balance Sheet after admission.

Questions for Practice | Q 35 | Page 165

Ashish and Dutta were partners in a firm sharing profits in 3:2 ratio. On Jan. 01, 2015 they admitted Vimal for 1/5 share in the profits. The Balance Sheet of Ashish and Dutta as on Jan. 01, 2016 was as follows

 Balance Sheet of A and B as on 1.1.2016 Liabilites Amount Rs Assets Amount Rs Creditors 15,000 Land & Building 35,000 Bills Payable 10,000 Plant 45,000 Ashish Capital 80,000 Debtors 22,000 Dutta’s Capital 35,000 Less : Provision 2,000 20,000 Stock 35,000 Cash 5,000 1,40,000 1,40,000

It was agreed that:
i) The value of Land and Buildingbeincreased by Rs 15,000.
ii) The value of plantbeincreased by 10,000.
iii) Goodwill of the firm be valued at Rs 20,000.
iv) Vimal to bring in capital to the extent of 1/5th of the total capital of the new firm.

Record the necessary journal entries and prepare the Balance Sheet of the firm after Vimal’s admission.

## Chapter 3: Reconstitution of a Partnership Firm – Admission of a Partner

Questions for Practice

## NCERT solutions for Class 12 Accountancy - Not-for-profit Organisation and Partnership Accounts chapter 3 - Reconstitution of a Partnership Firm – Admission of a Partner

NCERT solutions for Class 12 Accountancy - Not-for-profit Organisation and Partnership Accounts chapter 3 (Reconstitution of a Partnership Firm – Admission of a Partner) include all questions with solution and detail explanation. This will clear students doubts about any question and improve application skills while preparing for board exams. The detailed, step-by-step solutions will help you understand the concepts better and clear your confusions, if any. Shaalaa.com has the CBSE Class 12 Accountancy - Not-for-profit Organisation and Partnership Accounts solutions in a manner that help students grasp basic concepts better and faster.

Further, we at Shaalaa.com provide such solutions so that students can prepare for written exams. NCERT textbook solutions can be a core help for self-study and acts as a perfect self-help guidance for students.

Concepts covered in Class 12 Accountancy - Not-for-profit Organisation and Partnership Accounts chapter 3 Reconstitution of a Partnership Firm – Admission of a Partner are Modes of Reconstitution of a Partnership Firm, Admission of a New Partner, Retirement and Death of a Partner - Calculation of New Profit Sharing Ratio, Retirement and Death of a Partner - Sacrificing Ratio, Concept of Goodwill, Adjustment for Accumulated Profits and Losses, Accounting for Revaluation of Assets and Reassessment of Liabilities, Admission of a Partner - Adjustment of Capitals, Change in Profit Sharing Ratio Among the Existing Partners, Admission of a Partner - Treatment of Goodwill, Retirement Or Death of a Partner - Treatment of Goodwill, Factors Affecting Goodwill, Methods of Valuation of Goodwill, Treatment of Goodwill.

Using NCERT Class 12 solutions Reconstitution of a Partnership Firm – Admission of a Partner exercise by students are an easy way to prepare for the exams, as they involve solutions arranged chapter-wise also page wise. The questions involved in NCERT Solutions are important questions that can be asked in the final exam. Maximum students of CBSE Class 12 prefer NCERT Textbook Solutions to score more in exam.

Get the free view of chapter 3 Reconstitution of a Partnership Firm – Admission of a Partner Class 12 extra questions for Class 12 Accountancy - Not-for-profit Organisation and Partnership Accounts and can use Shaalaa.com to keep it handy for your exam preparation