INDIAN SCHOOL AL WADI AL KABIR

Class: XII Department: Commerce.

Worksheet: 2 Admission of a partner

1. Chander and Damini were partners in a firm sharing profits and losses equally. On 31st
March, 2023 their balance sheet was as follows:

LIABILITIES Rs. ASSETS Rs.

Sundry Creditors 1,04,000 Cash at Bank 30,000
Capital A/c: Bills Recieveable 45,000
Chander 2,50,000 Sundry Debtors 75,000
Damini 2,16,000 Furniture 1,10,000
4,66,000 Land & Building 3,10,000
5,70,000 5,70,000

On 1st April, 2023, they admitted Elina as a new partner for 1/3 share in the profits on the following
conditions.
(i) Elina will bring ₹ 3,00,000 as her capital and ₹ 50,000 as her share of goodwill premium, half of
which will be withdrawn by Chander and Damini.
(ii) Debtors to the extent of ₹ 5,000 were unrecorded.
(iii) Furniture will be reduced by 10% and 5% provision for bad and doubtful debts will be created
on bills receivables and debtors.
(iv) Value of land and building will be appreciated by 20%.
(v) There being a claim against the firm for damages, a liability to the extent of ₹ 8,000 will be
created for the same.
Prepare revaluation account, partners’ capital account and Balance sheet of the reconstituted firm.

2. On 31st March, 2023 the Balance Sheet of Arjun and Aditya who share profits and losses in
the ratio of 3 : 2 was as follows :

LIABILITIES ₹ ASSETS ₹.

Creditors 28,000 Patent 57,000

General Reserve 10,000 Stock 33,000

Employees’ Provident Debtors 65,000

Fund 22,000 Less:Provision -5,000
60,000
Arjun’s capital Cash 10,000
60,000
Aditya’s capital 40,000

1,60,000 1,60,000

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They decided to admit Ramesh on 1st April, 2023 for 1/5th share which he acquired wholly from
Aditya on the following terms:
(i) Ramesh shall bring ₹10,000 as his share of premium for Goodwill and capital of ₹50,000
(ii) The Provision for bad debt to be reduced to ₹4,000
(iii) A claim of ₹5,000 on account of workmen’s compensation was to be provided for.
iv) Patents were undervalued by ₹2,000.
(v)Stock in the books was valued 10% more than its market value.

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

3. Rajinder and Vijay were partners in a firm sharing profits in the ratio 3:2. On 31st March 2023
their balance sheet was as follows:

LIABILITIES ₹ ASSETS ₹.

Capital A/cs: Fixed Assets (Tangible) 3,60,000

Rajinder 3,00,000
Vijay 1,50,000 4,50,000
Current A/cs: Goodwill 50,000
Rajinder 50,000
Vijay 10,000 60,000
Creditors 75,000 Investments 40,000

General Reserve 60,000 Debtors 1,00,000

Less: PBDD 4,000 96,000
Bank 25,000

Stock 74,000

6,45,000 6,45,000

With an aim to expand business it is decided to admit Ranvijay as a partner on 1st April 2023 on
the following terms:
a) Provision for doubtful debts is to be increased to 6% of debtors.
b) An outstanding bill for repairs ₹ 50,000 to be accounted in the books
c) An unaccounted interest accrued of ₹ 7500 be provided for
d) Investment were sold at book value.
e) Half of stock was taken by Rajinder at ₹42,000 and remaining stock was also to be revalued
at the same rate.
f) New profit-sharing ratio of partners will be 5:3:2.
g) Ranvijay will bring ₹ 1,00,000 as capital and his share of goodwill which was valued at twice
the average profit of the last three years ended 31st March 2023, 2022 and 2021 were ₹ 1,50,000,
₹ 1,30,000 and ₹ 1,70,000 respectively.

Prepare Revaluation, Partners Current A/c & Partners capital A/c

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 4. P and Q are partners in a firm sharing profits in the ratio of 4 : 1. On 31st March, 2024, their
balance sheet was as follows:

LIABILITIES Rs. ASSETS Rs.

Creditors 40,000 Cash 24,000
Outstanding salary 6,000 Debtors 36,000
-Provision (4,000) 32,000
General Reserve 10,000 Stock 40,000
Capital: P: 1,20,000 Furniture 80,000
Q: 80,000 Plant & Machinery 80,000
2,00,000
2,56,000 2,56,000

On 01/04/2024, E was admitted for 1/4 share in the profits on the following terms
(i) E will bring ₹ 1,00,000 as his capital and ₹ 20,000 for his share of goodwill premium, half of
which will be withdrawn by P and Q.
(ii) Debtors ₹ 2,000 will be written off as bad debts and a provision of 4% will be created on debtors
for bad and doubtful debts.
(iii) Stock will be reduced by ₹ 2,000, furniture will be depreciated by ₹ 4,000 and plant & machine
is depreciated by 10%.
(iv) Investments ₹ 7,000 not shown in the balance sheet will be taken into account.
(v) There was an outstanding repairs bill of ₹ 2,300 which will be recorded in the books.
Prepare necessary accounts and balance sheet.

5. W and R were partners in a firm sharing profits in the ratio of 3 : 2 respectively. On 31st
March, 2024, their balance sheet was as follows:

LIABILITIES Rs. ASSETS Rs.

Capital: W 20,000 Goodwill 4,000
R 15,000 35,000
Investment Fluctuation Fund 4,000 Investment 10,000
Bank Loan 10,000 Patent 10,350
Creditors 17,500 Plant 17,500
Debtors 10,000
-PBDD (350) 9,650
Stock 12,500
Cash 2,500
66,500 66,500

B was admitted as a new partner on 01/04/2024 on the following conditions:

(i) B will get 4/15th share of profits.
(ii) B had to bring ₹ 15,000 as his capital.
(iii) B would pay cash for his share of goodwill based on 2.5 years purchase of average profit of last
4 years.
(iv) The profits of the firm for the years ending 31st March, 2021, 2022, 2023 and 2024 were ₹
10,000, ₹ 7,000 , ₹ 8,500 and ₹ 7,500 respectively.
(v) Stock was valued at ₹ 10,000 and provision for doubtful debts was raised up to ₹ 500.
(vi) Plant was revalued at ₹ 20,000 and the Market value of Investment were ₹ 8,000.

Prepare revaluation account, partners’ capital account and the balance sheet of the new firm.

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6.Anil and Beena were partners in a firm sharing profits in the ratio of 4 : 3.
On 1st April, 2024 they admitted Chahat as a new partner for 1/4th share in the profits of the firm.
On the date of Chahat’s admission, the balance sheet of Anil and Beena showed a general reserve of
₹ 70,000, a debit balance of ₹ 7,000 in the profit and loss account and an investment fluctuation
fund of ₹ 10,000.
The following was agreed upon, on Chahat’s admission:
(i) Chahat will bring ₹ 80,000 as her capital and her share of goodwill premium of ₹ 21,000 in cash.
(ii) The market value of investments was ₹ 17,000 less than the book value.
(iii) New profit sharing ratio was agreed at 2 : 1: 1.

Pass the necessary journal entries for the above on Chahat’s admission.

7.Karan and Arjun share profits and losses in the ratio of 3:1. On 1st April 2024, a new partner Jay
is admitted into the Partnership and it is decided that Jay shall pay ₹ 40,000 as capital and the capital
of the old partners shall be adjusted on the basis of new partner’s capital. Actual cash is to be
brought in or withdrawn by the old partners, as the case may be.
Calculate the New Capital of each partner, Surplus or Deficit Capital, and pass the necessary
Journal entries when the New Profit Sharing Ratio is 5:3:2 and the Capital after adjustments of
Karan and Arjun is ₹85,400 and ₹39,800, respectively.

8. On 31st March, 2024 the Balance Sheet of A and B who share profits and losses in the ratio of
3: 2 was as follows:

LIABILITIES ₹ ASSETS ₹.
Creditors 20,000 Plant & Machinery 20,000
General Reserve 30,000 Land & Building 16,000
Workmen Compensation 10,000 Debtors 24,000
Fund Less:Provision 2,000
22,000
A’s capital 20,000 Stock 24,000
B’s capital 20,000 Cash 8,000

Goodwill 10,000

1,00,000 1,00,000

They decided to admit C on 1st April, 2024 for 1/5th share of profit on the following terms:
(i) Provision for doubtful debt is increased by ₹ 4,000
(ii) Land & Building is increased to ₹ 40,000.
(iii) Value of Stock is increased by ₹ 8,000.
(iv) The liability against workmen compensation reserve is determined at ₹ 4,000.
(v)C brought ₹ 60,000 in cash of which ₹ 12,000 was for his share of premium.
(vi) Capitals of A and B were adjusted on the basis of C’s capital contribution and any surplus or
deficit was adjusted by brining in or withdrawing cash.

Prepare Revaluation Account, and Capital Accounts of the Partners.

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9. X and Y were partners in the profit-sharing ratio of 3: 2. Their balance sheet as at March 31, 2024
was as follows:
LIABILITIES ₹ ASSETS ₹.

Creditors 56,000 Plant and Machinery 70,000

General Reserve 14,000 Buildings 98,000
Capital Accounts: Stock 21,000
X 1,19,000 Debtors 42,000
Y 1,12,000 (-)Provision - 7,000
2,31,000 35,000
Cash in Hand 77,000
3,01,000 3,01,000

Z was admitted for 1/6th share on the following terms:

(i)Z will bring ₹ 56,000 as his share of capital, but was not able to bring any amount to compensate
the sacrificing partners.
(ii)Goodwill of the firm is valued at ₹. 84,000.
(iii)Plant and Machinery were found to be undervalued by ₹ 14,000 Building was to brought up to ₹
1,09,000.
(iv)All debtors are good.
(v) Capitals of X and Y will be adjusted on the basis of Z’s share and adjustments will be done by
opening necessary current accounts.
You are required to prepare revaluation account; partners’ capital account and Balance Sheet after
Z’s admission.

10. Abha and Bimal are partners in a firm sharing profits and losses in the ratio of 3 : 2. On 31st
March, 2024 they admitted Chintu into partnership for 1/5th share in the profits of the firm. On that
date their balance sheet stood as under:

LIABILITIES Rs. ASSETS Rs.

General Reserve 20,000 Machinery 1,30,000
Creditors 1,00,000 Furniture 25,000
Abha’s Capital 1,20,000 Investment 1,00,000
Bimal’s Capital 1,00,000 Debtors 50,000
Bank 35,000
3,40,000 3,40,000

Chintu was admitted on the following terms on 01/04/2024

(i) He will bring ₹ 80,000 as capital and ₹ 30,000 for his share of goodwill premium.
(ii) Partners will share future profits in the ratio of 5 : 3 : 2.
(iii) Profit on revaluation of assets and reassessment of liabilities was ₹ 7,000.
(iv) After making adjustments, the capital accounts of the partners will be in proportion to Chintu’s
capital. Balance to be paid off or brought in by the old partners by cheque as the case may be.
Prepare the capital accounts of the partners; bank account and pass the journal entries for capital
adjustment.

11. Prakash and Rakesh are in Partnership sharing profits and losses in the ratio of 3:2. A new
partner Suraj is admitted to the firm and agrees to bring 20% of the total capital of the new firm.
If the Adjusted Capital of Prakash and Rakesh is ₹34,000 and ₹26,000, respectively, calculate the
amount of the capital to be brought in by Suraj, and also pass the necessary Journal Entries.

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12. On 31st March, 2024 the Balance Sheet of A and B who share profits and losses in 3 :2 was as
follows :

LIABILITIES ₹ ASSETS ₹.
Creditors 10,000 Plant & Machinery 10,000
General Reserve 15,000 Land & Building 8,000
Workmen Compensation 5,000 Debtors 12,000
Fund Less:Provision 1,000
11,000
A’s capital 10,000 Stock 12,000
B’s capital 10,000 Cash 9,000

50,000 50,000

They decided to admit C on 1st April, 2024 for 1/5th share of profit on the following terms :
(i) Provision for doubtful debt is increased by ₹2,000
(ii) Land & Building is increased to ₹26,000.
(iii) Value of Stock is increased by ₹4,000.
(iv) The liability against workmen compensation reserve is determined at ₹2,000.
(v)C brought his share of goodwill ₹5,000 in cash
(vi) C would bring further cash to make his capital equal to 1/5th of the total capital of the new firm
after the above adjustments are carried out.
Prepare Revaluation Account, Capital Accounts of the Partners and the Balance Sheet.

13. Yuv and Veer were partners in a firm sharing profits and losses in the ratio of 3 : 1. Their Balance
Sheet as on 31st March, 2022 was as under : Balance Sheet of Yuv and Veer as at 31st March, 2023
LIABILITIES ₹ ASSETS ₹.

Creditors 41,000 Machinery 60,000

General Reserve 80,000 Building 40,000

Outstanding expense 12,000 Investment 60,000

Yuv’s Capital 79,000 Stock 50,000

Veer’s Capital 48,000 Debtors

38,000
Less. Provision 34,000
(16,000)
Cash 16,000

2,60,000 2,60,000

They decided to admit Yash in the firm on 1st April, 2023 for 1/4 share in profits on the following
terms :
(i)Yash will bring in proportionate capital and ₹4,000 as his share of goodwill premium in cash.
(ii) Investments were valued at ₹68,000.
(iii) Plant and Machinery was to be depreciated by 10%.
Prepare Revaluation Accounts and Partners Capital A/c and Cash A/c.

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14. Madhuri and Arsh were partners in a firm sharing profits and losses in the ratio of 3 : 1. Their
Balance Sheet as at 31st March, 2019, was as follows :
Balance Sheet of Madhuri and Arsh as at 31st March, 2023
LIABILITIES ₹ ASSETS ₹.

Capitals : Machinery 4,70,000

Madhuri 3,00,000
Arsh 2,00,000 5,00,000
Workmen’s Compensation Fund 60,000 Investments 1,10,000

Creditors 1,90,000 Debtors 1,20,000

Less : Provision for doubtful
debts 10,000 1,10,000
Employees’ Provident Fund 1,10,000 Stock 1,40,000

Cash 1,30,000

8,60,000 8,60,000

On 1st April, 2023, they admitted Jyoti into partnership for ¼ th share in the profits of the firm.
Jyoti brought proportionate capital and ₹40,000 as her share of goodwill premium.
The following terms were agreed upon :
(i) Provision for doubtful debts was to be maintained at 10% on debtors.
(ii) Stock was undervalued by ₹10,000
(iii) An old customer whose account was written off as bad, paid ₹15,000.
(iv) 20% of the investments were taken over by Arsh at book value.
(v) Claim on account of workmen’s compensation amounted to ₹70,000.
(vi). Creditors included a sum of ₹27,000 which was not likely to be claimed.
Prepare Revaluation Account, Partners’ Capital Accounts.

15. Titan Enterprises is a partnership business with Ryan, Williams and Sania as partners engaged
in production and sales of electrical items and equipment. Their capital contributions were
₹50,00,000, ₹50,00,000 and ₹80,00,000 respectively with the profit the sharing ratio of 5:5:8.
As they are now looking forward to expanding their business, it was decided that they would
bring in sufficient cash to double their respective capitals. This was duly followed by Ryan and
Williams but due to unavoidable reasons Sania could not do so and ultimately it was agreed that
to bridge the shortfall in the required capital a new partner should be admitted who would bring
in the amount that Sania could not bring and that the new partner would get share of profits equal
to half of Sania’s share which would be sacrificed by Sania only.
Consequent to this agreement Ejaz was admitted and he brought in the required capital and
₹30,00,000 as premium for goodwill.
Based on the above information you are required to answer the following questions:
1. What will be the new profit-sharing ratio of Ryan, Williams, Sania and Ejaz?
2. What is the amount of capital brought in by the new partner Ejaz?
3. What is the value of the goodwill of the firm?
4. What will be journal entry for distribution of Premium for Goodwill brought in by Ejaz?

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