Chapter-4 , ADMISSION OF PARTNER

  1. State any two rights acquired by a newly admitted partner. [1]

 

  1. What is the main purpose of admitting a new partner in a firm? [1]

 

  1. Distinguish between sacrificing ratio and gaining ratio. [1]

 

  1. Dhokla and Kumar are partners sharing profits in the ratio of 3:2. They admitted Mohan as a new partner for 1/5th share in the future profit. Calculate new profit sharing ratio of all the partners. [1]

 

  1. A and B are partners sharing profits and losses in the ratio of 3:2. They admit C into partnership giving him 1/5th share in profits which he acquires from A and B in the ratio of 2:1. Calculate the new profit sharing ratio. [3]

 

  1. X and Y shared profits in the ratio of 3:2. When Z was admitted as a partner, X surrendered 1/4th of his share and Y 2/5th of his share in favour of Z. calculate new profit sharing ratio. [3]

 

  1. Ram and Mohan are partners in a firm sharing profits in 4:1 ratio. They admitted Sohan as a new partner for 1/4th share in the profits, which Sohan acquired fully from Ram. Determine the new profit sharing ratio of the partners. [3]

 

  1. VK and MK were partners in a firm sharing profits in 5:3 ratio. They admit KK and PP as new parnters. VK surrenders 1/2 of her share in favour of KK and MK surrenders 1/3rd of his share in favour of PP. Calculate new profit sharing ratio of partners. [3]

 

  1. Dhokla and Singh are partners in a firm sharing profits in the ratio of 5:3. They admit Kumar as a new partner for 1/7th share in the profit. The new profit sharing ratio will be 4:2:1. Calculate the sacrificing ratio of Dhokla and Singh. (3)

 

  1. King and Singh are partners in a firm sharing profits in the ratio of 3:2. They admitted Dhokla as a new partner for 1/4th share. The new profit sharing ratio between King and Singh will be 2:1. Calculate their sacrificing ratio.

 

  1. X and Y are partners sharing profits in the ratio of 4:3. They admit Z as a new partner. The profit sharing ratio of X, Y and Z will be 2:3:1. Calculate the gain or sacrifice of old partners. (3)

 

  1. 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. A, B, C and D would share profits in future in 3/10; 4/10; 2/10; 1/10. Calculate the new profit sharing ratio after E’s admission. (3)

 

  1. X and Y divide profits and losses in the ratio of 3:2. Z is admitted in the firm as a new partner with 1/6th share, which he acquires, from X and Y in the ratio of 1:1. Calculate new profit sharing ratio of all partners. (3)

 

  1. What do you mean by Hidden Goodwill? [1]

 

  1. What compensation is paid by a new partner to the sacrificing partners for sacrificing their share in favour of him? [1]

 

  1. Dhokla and Raj are partner in a firm sharing profits in the ratio of 3:2. They admit Mohan into the partnership for 1/5th share. Mohan brings Rs.60,000 as capital and Rs.20,000 as premium for goodwill. New profit sharing ratio of partners will be 5:3:2. Pass necessary journal entries. [3]

 

  1. X and Y were partners in a firm sharing profits in the ratio of 3:2. They admitted Z and M as new partners. The new profit sharing ratio will be 2:2:1:1. Z and M brought in Rs.11,00,000 each for their respective capitals and also necessary amount of premium for goodwill in cash. Goodwill was valued at Rs.9,60,000 for the firm. Calculate the sacrificing ratio of X and Y and pass necessary journal entries for the above transactions in the books of the firm. [3]
  2. (a) Ashu and Bindu are partners in a firm sharing profits in the ratio of 3 : 2. Chameli is admitted as a partner. Ashu and Bindu surrender 1/2 of their respective shares in favour of Chameli. Find the new profit sharing ratio and also the sacrificing ratio.

(b) Chameli is to bring his share of premium for goodwill in cash. The goodwill of the firm is estimated at Rs.80,000. Pass necessary entries for the record of goodwill in the above case. [3]

 

  1. AK and BK are partners in a firm sharing profits in the ratio of 5 : 3. They admit CK into the partnership for 3/10th share in profits, which he takes 1/10th from AK and 1/10th from BK. CK brings in Rs.15,000 as premium in cash out of his share of Rs.39,000. Goodwill account does not appear in the books of AK and BK. Give necessary journal entries. [3]

 

  1. Ram, Shyam and Mohan were partners in a firm sharing profits in the ratio of 3:2:1. They admitted Dhokla as a new partner for 1/7th share in the profits. The new profit sharing ratio will be 2:2:2:1 respectively. Dhokla brought Rs.6,00,000 for his capital and Rs.90,000 for his 1/7th share of goodwill. Give necessary journal entries. [3]

 

  1. A and B were partners in a firm sharing profits and losses in the ratio of 3:2. They admitted C as a new partner for 3/7th share in the profits and the new profit sharing ratio will be 2:2:3. C brought Rs.4,00,000 as his capital and Rs.3,00,000 as premium for goodwill. Half of their share of premium was withdrawn by A and B from the firm. Calculte sacrificing ratio and give necessary journal entries. [3]

 

  1. X and Y are partners in a firm sharing profits in 3:2 ratio. They admitted Z as a new partner and the new profit sharing ratio will be 2:1:1. Z brought Rs.20,000 for her share of goodwill. Goodwill already appeared in the books at Rs.10,000. Give necessary journal entries. (3)

 

  1. Dhokla and David are partners in a firm sharing profits in the ratio of 3:2. On January 1, 2014 they admit Kumar as a new partner for 1/6th share in the future profits. Kumar brought Rs.1,00,000 for his capital but could not bring any amount for goodwill. The firm’s goodwill on Kumar’s admission was valued at Rs.75,000. Give necessary journal entries. (3)

 

  1. VK and KK are partners in a firm sharing profits in the ratio of 2:3. On January 1, 2014 they admit PK as a new partner for 1/4th share in the profits. PK brought Rs.80,000 as capital and Rs.18,000 for his 1/4th share in profits. The new profit sharing ratio of VK, KK and PK will be 3:3:2. VK and KK decided to withdraw the premium paid by PK. Record necessary journal entries. (3)

 

  1. EK and FK were partners in a firm sharing profits in the ratio of 3 : 1. They admitted GK as a new partner on 1.3.2005 for 1/3rd share. It was decided that EK, FK and GK will share future profits equally. GK brought Rs.50,000 in cash and Machinery worth Rs.70,000 for his share of profit as premium for goodwill. Showing your working clearly, give necessary entries. (3)

 

  1. Dhokla and Mohan are partners in a firm sharing profits in the ratio of 3:2. On April 1, 2014 they admit Sohan as a new partner for 3/13 share in the profits. The new ratio will be 5:5:3. Sohan contributed the following assets towards his capital and for his share of goodwill: Stock Rs.20,000; Debtors Rs.30,000; Land Rs.50,000; Plant and Machinery Rs.30,000. On the date of admission of Sohan, the goodwill of the firm was valued at Rs.2,60,000. Give necessary entries. (3)

 

  1. (Hidden Goodwill) VK and GK are partners in a firm sharing profits in the ratio of 3:2. Their capitals were Rs.40,000 and Rs.25,000 resepectively. They admitted MK on January 1, 2014 as a new partner for 1/5th share in the future profits. MK brought Rs.30,000 as capital. Calculate the value of Goodwill of the firm and record necessary journal entries. (3)

 

  1. (Hidden Goodwill) X and Y are partners with capitals of Rs.1,30,000 and Rs.1,10,000 respectively. They admit Z as a partner with 1/4th share in profits of the firm. Z brings Rs.1,30,000 as his share of capital. Give journal entries.

 

  1. X and Y are partners in a firm sharing profits in the ratio of 4:3. On 1st January they admitted Z as a new partner. On the date of Z’s admission the balance sheet of X and Y showed a General Reserve of Rs.1,40,000 and a debit balance of Rs.14,000 in Profit and Loss Account. Give journal entries for the treatment of these items on Z’s admission. [3]

 

  1. Give Journal entries for the following on the admission of Dhokla, as a partner in the Journal of Amit and Bobby:
    • Unrecorded Investments worth Rs.20,000
    • Unrecorded Liabilities towards suppliers for Rs.6,000 [3]
    • A and B are partners in a firm sharing profits in the ratio of 2:1 is admitted into the firm with 1/4th share in profits. He will bring Rs. 30,000 as his capital. The balance sheet of A and B as on 31.3.2003 was as under:
Liabilities Rs Assets Rs
Creditors

Bills payable

general reserve

A’s capital

B’s capital

8,000

4,000

6,000

52,000

30,000

 

 

1,00,000

Cash

Debtors

Stock

Furniture

Machinery

building

12,000

8,000

10,000

5,000

25,000

40,000

 

1,00,000

Other terms of the agreement are as under

  • C will bring I Rs 12,000 as his share of goodwill.
  • Building was valued at Rs. 45,000 and Machinery at Rs 23,000.
  • A provision for bad debt is to be created @6% on debtors.

Prepare Revaluation A/c, Partners’ Capital A/cs and the balance sheet of new firm.

 

  1. Ram and Shyam were partners in a firm sharing profits in the ratio of 3 : 2. On 31. 3. 2013. Their Balance Sheet was as follows:
Liabilities Amount Assets Amount
Sundry Creditors

Bills Payable

Outstanding Expenses

Capitals :

Ram         1,80,000   Shyam       70,000

 

50,000

20,000

10,000

 

 

 

2,50,000

3,30,000

Land and Building

Machinery

Stock

Debtors

Cash

1,00,000

80,000

1,00,000

40,000

10,000

 

 

3,30,000

On the above date Mohan was admitted as a new partner in the firm for 1/4th share of profits on the following terms:

  • Mohan will bring Rs.1,20,000 for his capital and Rs.20,000 for his share as premium for goodwill.
  • Machinery was to be depreciated by 10% and Land and Building was to be appreciated by Rs.30,000.
  • Stock was overvalued by Rs.20,000.
  • A provision of 5% was to be created for doubtful debts.
  • Salary outstanding was Rs.5,000.

Prepare Revaluation A/c, Partners Capital A/cs and Balance Sheet of new firm.

 

  1. Krishna and Suresh are partners in a firm sharing profits in the ratio of 3 : 2. Their balance sheet was as follows on 31.3.2013:
Liabilities Amount Assets Amount
General Reserve

Sundry Creditors

Capitals : Krishna     30,000                                   Suresh                       20,000

5,000

15,000

 

50,000

 

 

 

70,000

Plant & Machinery

Patents

Furniture

Stock

Debtors

Cash

30,000

5,000

3,000

16,000

15,000

1,000

 

70,000

On that date Mohan is admitted as a partner for 1/5th share on the following terms:

(a) He is to contribute Rs.14,000 as his share of capital which includes his share of premium for goodwill.

(b) Goodwill is valued at 2 years purchase of the average profits of the last 4 years, which were Rs.10,000; Rs.9,000; Rs.8,000 and Rs.13,000 respectively.

(c) Plant & Machinery to be written down to Rs.25,000 and patents written up by Rs.8,000.

Prepare Revaluation A/c, Partners Capital A/c   and Balance Sheet of new firm.

 

  1. Usha and Asha are partners in a firm sharing profits in the ratio of 3:2. Their Balance Sheet on 31st March 2013 was as follows:
Liabilities Rs Assets Rs
Creditors

General reserve

Bills Payable

Usha’s capital

Asha’s capital

27,000

18,000

5,000

40,000

35,000

 

 

1,25,000

Cash

Debtors                  48,000

Less : Provision     4,800

Stock

Patents

Building

 

 

24,000

 

43,200

30,000

7,400

20,400

 

1,25,000

Neelam is admitted into the partnership giving her 1/5th share in profits. Neelam to bring Rs.30,000 as her capital and her share of goodwill in cash, subject to following terms:

  • Goodwill of the firm to be valued at Rs.50,000
  • Stock to be reduced by 10% and Provision for bad debts be reduced by Rs.2,400.
  • Patents are valueless and there was claim gainst the firm for damages amounting to [6] Rs.2,000. The claim has now been accepted.

Prepare Revaluation A/c, Partners’ Capital A/cs and the balance sheet of new firm.

 

  1. Ram and Shyam are partners in a firm sharing profits in the ratio of 3:1. Their Balance Sheet on 31st March 2013 was as follows:
Liabilities Rs Assets Rs
Creditors

Workmen’s Compensation Fund General reserve

Ram’s capital

Shyam’s capital

 

 

 

2,800

1,200

2,000

6,000

4,000

 

 

16,000

Cash

Debtors                   48,000

Less : Provision       4,800

Stock

Investments

2,000

 

6,000

3,000

5,000

 

 

16,000

Mohan is admitted into the partnership giving her 1/5th share in profits subject to the following terms:

(i) Mohan shall bring in Rs.6,000 as his share of premium.

(ii) That unaccounted accrued income of Rs.100 be provided for.

  • The Market Value of Investment was Rs.4,500.
  • A debtor whose dues of Rs.500 was written off as bad debts paid Rs.400 in full settlement.
  • A claim of Rs.200 on account of workmen’s compensation to be provided for.
  • Mohan to bring to Rs.5,000 as his share of capital.

Prepare Revaluation A/c, Partners’ Capital A/cs and the balance sheet of new firm.

 

  1. Shashi and Ashu are partners in a firm sharing profits in the ratio of 3:2. Their Balance Sheet on 31st March 2013 was as follows:
Liabilities Rs Assets Rs
Creditors

General reserve

Workmen’s Compensation Fund Shashi’s capital

Ashu’s capital

 

 

18,000

25,000

15,000 15,000

10,000

 

 

83,000

Debtors                   22,000

Less : Provision         1,000

Land & Building

Plant & Machinery

Stock

Cash at Bank

 

 

 

21,000

18,000

12,000

11,000

21,000

 

83,000

Tanya is admitted into the partnership giving her 1/6th share in profits subject to the following terms:

  • Provision for doubtful debts to be increased by Rs.1,500.
  •  Value of Land and Building to be increased to Rs.21,000.
  • Value of Stock to be increased by Rs.2,500.
  • The Liability of workmen’s compensation fund was determined to be Rs.12,000.
  • Tanya brought in as her share of goodwill Rs.10,000 in cash.
  • Tanya was to bring further cash of Rs.15,000 for her capital.

Prepare Revaluation A/c, Partners’ Capital A/cs and the balance sheet of new firm.

 

  1. P and S are partners in a firm sharing profits in the ratio of 3:2. Their Balance Sheet on 31st March 2013 was as follows:
Liabilities Rs Assets Rs
Bank overdraft

Creditors

Provision for bad debts

General Reserve

V’s Loan

P’s capital

S’s capital

 

 

20,000

30,000

1,000

15,000

20,000 1,00,000 1,80,00

 

3,66,000

Cash

Debtors

Bills Receivable

Stock

Building

Land

8,000

30,000

40,000

50,000

90,000 1,48,000

 

 

3,66,000

V is admitted into the partnership giving her 1/8th share in profits subject to the following terms:

  • V’s Loan will be converted into his capital.
  • The Goodwill of the firm was valued at Rs.80,000 and V brought his share of goodwill premium in cash.
  • Provision for bad debts was to be made equal to 5% of the debtors.
  • Stock was to be depreciated by 5%.
  • Land was to be appreciated by 10%.

Prepare Revaluation A/c, Partners’ Capital A/cs and the balance sheet of new firm.

 

  1. A and B are partners in a firm sharing profits in the ratio of 2:1. Their Balance Sheet on 31st March 2013 was as follows:
Liabilities Rs Assets Rs
Bills Payable

Sundry creditors

Outstanding expenses

A’s capital

B’s capital

10,000

58,000

2,000 1,80,000 1,50,000

 

 

4,00,000

Cash in Hand

Cash at Bank

Sundry Debtors

Stock in Hand

Plant and Machinery

Building

 

 

10,000

40,000

60,000

40,000 1,00,000 1,50,000

 

4,00,000

C is admitted into the partnership giving her 1/4th share in profits subject to the following terms:

  • C will bring in Rs.1,00,000 as his capital and Rs.60,000 as his share of goodwill for 1/4th share in profits.
  • Plant is to be appreciated to Rs.1,20,000 and the value of buildings is to be appreciated by 10%.
  • Stock is found overvalued by Rs.4,000.
  • A Provision for bad and doubtful debts is to be created at 5% of debtors.
  • Creditors were unrecorded to the extent of Rs.1,000.

Prepare Revaluation A/c, Partners’ Capital A/cs.

 

  1. X and Y are partners sharing profits in the ratio of 2:1. Z is admitted into the firm for 1/4th share of profits. Z brings in Rs.40,000 in respect of his capital. The capitals of old partners after all adjustments in respect of goodwill, revaluation of assets and liabilities, etc. have been worked out at Rs.90,000 for X and Rs.30,000 for Y. It is agreed that partners capitals will be according to the new profit sharing ratio. Find out the capitals of X and Y.[3]

 

  1. Dhokla, Mohan and Kumar are partners in a firm sharing profits in the ratio of 3:2:1. Sohan is admitted into the firm for 1/4th share in profits, which he gets as 1/8th from Dhokla and 1/8th from Mohan. The total capital of the firm is agreed upon as Rs.60,000 and Sohan is to bring in cash equivalent to 1/4th of this amount as his capital. The capitals of other partners are also to be adjusted in the ratio of their respective shares in profits and losses. The respective capitals of Dhokla, Mohan and Kumar after all adjustments have been made, works out at Rs.20,000, Rs.17,500 and Rs.15,000 respectively. Calculate the final capitals of partners. [3]

 

  1. A and B are partners in a firm sharing profits in the ratio of 3 : 2. Their balance sheet as at 31.12.2013 stood as under:
Liabilities Amount Assets Amount
General Reserve

Sundry Creditors

Bank Loan

Capitals : A        35,000

B        30,000

10,000

36,000

9,000

 

65,000

 

 

 

1,20,000

Machinery

Furniture

Investments

Stock

Debtors                        19,000

Less : Provision             2,000

Cash

33,000

15,000

20,000

23,000

 

17,000

12,000

 

1,20,000

On that date they admitted C into partnership for 25% share in the profits on the following terms:

  • C brings capital proportionate to his share. He brings Rs.4,000 for goodwill in cash out of his share of Rs.7,000.
  • Depreciate furniture by 10%.
  • Half of the investments were to be taken over A and B in their profit sharing ratio and remaining to be valued at Rs.13,000.
  • Partners agreed to share future profits in the ratio of 3 : 3 : 2.

Prepare Revaluation A/c, Partners Capital A/cs and Balance Sheet of new firm.

 

  1. Ram and Shyam were partners in a firm sharing profits in the ratio of 3 : 2. On 31. 3. 2013. Their Balance Sheet was as follows:
Liabilities Amount Assets Amount
Sundry Creditors

Workmen Compensation fund General Reserve

Capitals : Ram        10,000

Shyam    10,000

10,000

5,000

15,000

 

20,000

 

 

50,000

Plant and Machinery

Land and Building

Debtors                         12,000

Less: Provision               1,000

Stock

Cash

10,000

8,000

 

11,000

12,000

9,000

 

50,000

On the above date Mohan was admitted as a new partner in the firm on the following terms:

  • Provision of doubtful debts would be increased by Rs.2,000.
  • The value of land and building would be increased to Rs.18,000.
  • The value of stock would be increased by Rs.4,000. (
  • The liability against Workmen’s Compensation Fund is determined at Rs.2,000.
  • Mohan brought in as his share of goodwill Rs.10,000 in cash.
  • Mohan would bring further cash as would make his capital equal to 20% of the total capital of new firm after the above revaluation and adjustments are carried out.

Prepare Revaluation A/c, Partners Capital A/cs and Balance Sheet of new firm.

 

  1. (When Capitals are adjusted on the basis of New Partner’s Capital) A and B are partners in a firm sharing profits in the ratio of 3 : 2. Their balance sheet was as follows on 31.3.2013:
Liabilities Amount Assets Amount
General Reserve

Sundry Creditors

Capitals : A           60,000

B           50,000

10,000

50,000

 

1,10,000

 

 

 

 

1,70,000

Goodwill

Plant & Machinery

Furniture

Investments

Stock

Debtors

Cash

 

 

5,000

65,000

15,000

20,000

20,000

30,000

15,000

 

1,70,000

On that date C is admitted as a partner on the following terms:

(a) C is to bring capital Rs.40,000 and Goodwill Rs.15,000.

(b) Partners agreed to share the future profits in the ratio of 5:3:2.

(c) Investments will be appreciated by 20% and furniture depreciated by 10%.

(d) One customer who owed the firm Rs.2,000 becomes insolved and nothing could be realised from him.

(e) Creditors will be written back by Rs.2,000.

(f) Outstanding bills for repairs Rs.1,000 will be provided for.

(g) Interest accrued on investments Rs.2,000.

(h) Capital of the partners shall be proportion to their profit sharing ratio. For this adjustments to be made through cash .

Prepare Revaluation A/c, Partners Capital A/cs and Balance Sheet of new firm.

 

  1. A and B are partners in a firm sharing profits in the ratio of 3:1. Their Balance Sheet on 31st March 2013 was as follows:
Liabilities Rs Assets Rs
Creditors

General reserve

A’s capital

B’s capital

70,000

10,000

50,000

80,000

 

 

 

 

2,10,000

Land and Building

Plant and Machinery Investments

Stock

Debtors                        35,000

Less : Provision             1,000 Cash

40,000

70,000

26,000

30,000

 

34,000

10,000

 

2,10,000

C is admitted into the partnership giving her 1/4th share in profits. C to bring Rs.60,000 as her capital, subject to following terms:

  • Goodwill of the firm to be valued at Rs.24,000
  • Land and Building were valued at Rs.65,000 and Plant and Machinery at Rs.60,000.
  • Provision for bad and doubtful debts was found in excess by Rs.400
  • A Liability of Rs.1,200 included in sundry creditors was not likely to arise.
  • The Capitals of the partners be adjusted on the basis of C’s contribution of capital.
  • Excess of shortfall, if any to be transferred to Current Accounts.

Prepare Revaluation A/c, Partners’ Capital A/cs and the balance sheet of new firm.

 

  1. (When new partner brings his share on the basis of Total Capital) The following is the Balance sheet as on 31st December 2002 of A and B, who share profits and losses in the ratio of 3 : 2.
Liabilities Rs Assets Rs
Capitals :

A

B

General Reserve

Workmen’s Compensation fund Creditors

 

10,000

10,000

15,000

5000

 

10,000

 

50,000

Plant and Machinery

Land and building

Debtors                   12,000

Less : Provision         1,000

Stock

Cash

10,000

8,000

 

11,000

12,000

9,000

 

 

50,000

On 1st January 2003, they agreed to admit C into partnership on the following terms :

  1. Provision of doubtful debts would be increased by Rs.2,000.
  2. The value of Land and Building would be increased to Rs.18,000.
  • The value of stock would be increased by Rs.4,000.
  1. The liability against Workmen’s Compensation Fund is determined at Rs.2,000.
  2. C brought in as his share of Goodwill Rs.10,000 in cash.
  3. Capital accounts of A and B will be adjusted by opening cash account vii)C would bring further cash as would make his capital equal to 20% of the total capital of the new firm after the above revaluation and adjustments are carried out.

Prepare Revaluation Account, Partners Capital accounts and balance sheet of the firm after C’s admission

 

  1. (When new partner brings his share on the basis of combined capital) A and B are partners sharing profits in the ratio of 3:2. Their Balance sheet on 31st March 2003 stood as under:

 

Liabilities Rs Assets Rs
Capitals:

A

B

General Reserve

Bank Loan

Creditors

 

70,000

60,000

20,000

18,000

72,000

 

 

2,40,000

Machinery

Furniture

Investments

Stock

Debtors                  38,000

Less: Provison         4,000

Cash

66,000

30,000

40,000

46,000

 

34,000

24,000

 

2,40,000

On this date they admitted C for 25% share in profits on following terms:

  1. a) C brings capital proportionate to his share after all adjustments and Rs.8000 for    goodwill out of his share of Rs.14,000.
  2. b) Depreciate furniture by 10%.
  3. c) Half of investments were to be taken over by A and B in their profit sharing ratio and remaining valued at Rs.26,000.
  4. d) New ratio will be 3:3:2
  5. e) C brings 25% of the combined capital of A and B as Capital.

Prepare Revaluation account, Partners capital account and Balance Sheet.

 

  1. (When Total Capital of firm is given in adjustment) A and B are partners in a firm sharing profits in the ratio of 3 : 2. Their Balance Sheet as on 31st December, 2004 stood as under :
Liabilities Rs Assets Rs
Capitals:

A

B

General Reserve

Bank Loan

Creditors

 

35,000

30,000

10,000

9,000

36,000

 

 

1,20,000

Machinery

Furniture

Investments

Stock

Debtors                  19,000

Less: Provison         2,000

Cash

33,000

15,000

20,000

23,000

 

17,000

12,000

 

1,20,000

On that date they admitted C into partnership for 1/4th share in the profit on the following terms :

  1. C brings capital proportionate to his share. He brings Rs.7,000 in cash as his share of goodwill.
  2. Debtors are all good.
  • Depreciate stock by 5% and Furniture by 10%.
  1. An outstanding Bill for repairs Rs.1,000 will be brought in books.
  2. Half of the investments were to be taken over A and B in their profit sharing     ratio at book value.
  3. Bank loan is paid off. vii)Partners agreed to share future profits in ratio 3 : 3 : 2.
  • Capital of the firm is fixed at 1,60,000. Excess or shortfall, if any, to be transferred to current accounts.

Prepare Revaluation account, Partners capital account and Balance Sheet.

 

  1. A and B are partners in a firm sharing profits in the ratio of 3:1. Their Balance Sheet on 31st March 2013 was as follows:
Liabilities Rs Assets Rs
Sundry creditors

A’s capital

B’s capital

41,500

30,000

16,000

 

 

 

 

87,500

Cash at bank

Bills Receivables

Debtors

Stock

Furniture

Land and Building

22,500

3,000

16,000

20,000

1,000

25,000

 

87,500

C is admitted into the partnership giving her 1/5th share in profits subject to the following terms:

  • C will bring in Rs.10,000 as his capital and Rs.5,000 as his share of goodwill for 1/5th share in profits. Half of the amount of goodwill is withdrawn by A and B.
  • Stock and Furniture are to be reduced by 10% each and 5% Reserve for doubtful debts is to be created on the Sundry Debtors and Bills Receivables.
  • Land and Building is to be appreciated by 20%.
  • A Liability of Rs.1,000 is to be created for a claim for damages against the firm.
  • An item of Rs.650 included in the Sundry Creditors is not likely to be claimed and therefore be written off.

Prepare Revaluation A/c, Partners’ Capital A/cs and Balance Sheet

Author: Ravi Kashyap

Commerce Expert

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