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NCERT solutions for Class 12 Accountancy chapter 3 - Reconstitution of a Partnership Firm – Admission of a Partner

Ncert Class 12 Accountancy - Not-for-Profit Organisation and Partnership Accounts

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NCERT Ncert Class 12 Accountancy - Not-for-Profit Organisation and Partnership Accounts

Ncert Class 12 Accountancy - Not-for-Profit Organisation and Partnership Accounts - Shaalaa.com

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

Exercise

Chapter 3: Reconstitution of a Partnership Firm – Admission of a Partner Exercise Exercise solutions [Page 164]

Exercise | Q 1 | Page 164

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

Exercise | Q 2 | Page 164

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

Exercise | Q 3 | Page 164

What is sacrificing ratio? Why is it calculated?

Exercise | Q 4 | Page 164

On what occasions sacrificing ratio is used?

Exercise | Q 5 | Page 164

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?

Exercise | Q 6 | Page 164

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

Chapter 3: Reconstitution of a Partnership Firm – Admission of a Partner Exercise Exercise solutions [Page 164]

Exercise | Q 1 | Page 164

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?

Exercise | Q 2 | Page 164

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

Exercise | Q 3 | Page 164

Explain various methods of valuation of goodwill.

Exercise | Q 4 | Page 164

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.

Exercise | Q 5 | Page 164

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

Exercise | Q 7 | Page 164

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

Exercise | Q 8 | Page 164

After revaluation has been done, the assets and liabilities appear at their current market values in the Balance Sheet of the reconstituted firm. This can be better explained with the help of the below explained example.
A and B shares profit and loss equally.
              Balance Sheet of A and B as on April 01, 2011

Liabilities Amt
(Rs.)
Assets Amt
(Rs.)
Sundry Creditors 1,00,000 Cash in Hand 8,000
Capital Accounts   Cash at Bank 28,000
A 75,000   Cash at Bank 40,000
B 75,000 150,000

Stock

36,000
   

Furniture

38,000
   

Plant and Machinery

1,00,000
  2,50,000   2,50,000

1) On that date C is admitted for 1/3rd share and brings 1,00,000 as capital.
2) The value of stock is increased by Rs 7,000.
3) A provision of Rs 2,000 has been created against Debtors.
4) Furniture revalued at Rs 35,000.
5) A machinery costing Rs 50,000 purchased is not recorded in books.
6) Rent outstanding Rs 2,000.
Prepare Revaluation Account, Partners’ Capital Account, Cash Account and Balance Sheet.

Chapter 3: Reconstitution of a Partnership Firm – Admission of a Partner Exercise Exercise solutions [Pages 164 - 171]

Exercise | Q 1 | Page 164

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?

Exercise | Q 2 | Page 164

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?

Exercise | Q 3 | Page 164

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?

Exercise | Q 4 | Page 165

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?

Exercise | Q 5 | Page 165

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?

Exercise | Q 6 | Page 165

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?

Exercise | Q 7 | Page 165

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?

Exercise | Q 8 | Page 165

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?

Exercise | Q 9 | Page 165

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?

Exercise | Q 10 | Page 165

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?

Exercise | Q 11 | Page 165

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?

Exercise | Q 12 | Page 165

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?

Exercise | Q 13 | Page 165

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
Exercise | Q 14 | Page 166

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?

Exercise | Q 15 | Page 166

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%?

Exercise | Q 16 | Page 166

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%?

Exercise | Q 17 | Page 166

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%?

Exercise | Q 18 | Page 166

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.

Exercise | Q 19 | Page 166

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?

Exercise | Q 20 | Page 166

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?

Exercise | Q 21 | Page 167

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?

Exercise | Q 22 | Page 167

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?

Exercise | Q 23 | Page 167

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.

Exercise | Q 24 | Page 167

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.

Exercise | Q 26 | Page 167

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?

Exercise | Q 27 | Page 168

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.

Exercise | Q 28 | Page 168

Leela and Meeta were partners in a firm sharing profits and losses in the ratio of 5:3. On Is Jan. 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.

Exercise | Q 29 | Page 168

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.

Exercise | Q 30 | Page 168

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

Balance Sheet of A and B as on December 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 Jan. 1,2017, C was admitted into partnership on the following terms:
(a) That C pays Rs 10,000 as his capital.
(b) That C pays Rs 5,000 for goodwill. Half of this sum is to be withdrawn by A and B.
(c) That stock and fixtures be reduced by 10% and a 5%, provision for doubtful debts be created on Sundry Debtors and Bills Receivable.
(d) That the value of land and buildings be appreciated by 20%.
(e) There being a claim against the firm for damages, a liability to the extent of Rs 1,000 should be created.(f) 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.

Exercise | Q 31 | Page 169

A and B are partners sharing profits and losses in the ratio of 3:1. On Ist Jan. 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?

Exercise | Q 32 | Page 169

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?

Exercise | Q 33 | Page 170

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.

Exercise | Q 34 | Page 170

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 December 31, 2016 (before Chintan’s admission) was as follows:

Balance Sheet of A and B as on 31.12.2016

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.

Exercise | Q 35 | Page 171

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

Exercise

NCERT Ncert Class 12 Accountancy - Not-for-Profit Organisation and Partnership Accounts

Ncert Class 12 Accountancy - Not-for-Profit Organisation and Partnership Accounts - Shaalaa.com

Textbook solutions for Class 12






















NCERT solutions for Class 12 Accountancy chapter 3 - Reconstitution of a Partnership Firm – Admission of a Partner

NCERT solutions for Class 12 Accountancy 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 Ncert 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 chapter 3 Reconstitution of a Partnership Firm – Admission of a Partner are Treatment of Goodwill, Methods of Valuation of Goodwill, Factors Affecting Goodwill, Retirement Or Death of a Partner - Treatment of Goodwill, Admission of a Partner - Treatment of Goodwill, Change in Profit Sharing Ratio Among the Existing Partners, Admission of a Partner - Adjustment of Capitals, Accounting for Revaluation of Assets and Reassessment of Liabilities, Adjustment for Accumulated Profits and Losses, Concept of Goodwill, Retirement and Death of a Partner - Sacrificing Ratio, Retirement and Death of a Partner - Calculation of New Profit Sharing Ratio, Admission of a New Partner, Modes of Reconstitution of a Partnership Firm.

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.

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