SHALOM HILLS INTERNATIONAL SCHOOL

ADMISSION OF A PARTNER
SUBJECT: ACCOUNTANCY (055)
CLASS: XII
Q1. Lucy, Rahul and Sanjay are partners sharing profit and losses in the ratio of 1:2:3. Arun is admitted as a partner
who brings in ₹ 20,000 as his capital for 1/5th share in the profits. 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 premium for Goodwill.
Give the Journal entries if goodwill already appeared in the books of ₹ 24,000.

Q2. Rose and Daisy carried on a business in partnership sharing Profits and Losses in the ratio of 3:1. Their Balance
Sheet as at 31st March, 2010 was as under: -

Lily was admitted as a partner on 1st April, 2010 on the following terms:-
(a) She was to bring in ₹ 35,000 as her capital for 1/5th share in profits.
(b) Goodwill of the firm was valued at ₹ 100,000. Lily was to bring half of her share of goodwill in cash.
(c) Stock and furniture were to be reduced in value by 10% and the provision for doubtful debts was to be brought up
to 10% of the debtors.
(d) The value of land and building was appreciated by 25%.
(e) Creditors include an amount of ₹ 5000 received as commission from Pinky. The necessary adjustment is required
to be made.
You are required to prepare the necessary accounts and the Balance Sheet of the newly constituted firm.

Q3. X, Y and Z are partners sharing profits and losses in the ratio of 2:2:1 respectively. Their Balance Sheet as at
31st March, 2010 is as given below: - Balance sheet
as at 31st March, 2010

The partners decided to admit T as a partner with effect from 1 st April, 2010 on the following terms: -
(a) T will bring ₹ 20,000 as capital and ₹ 10,000 as his share of goodwill.
(b) T could bring only ₹ 2500 as goodwill in cash.
(c) The value of stock should be increased by ₹ 10,000. The furniture should be depreciated by 10% and value of
land & building should be enhanced by 20%.
(d) Provision for doubtful debts should be made at 10% of the debtors.
(e) The outstanding liabilities include ₹ 2000 due to R which has been paid by X privately. Necessary entry is to be
passed to reimburse X before admitting the new partner.
(f) The new profit-sharing ratio for X, Y, Z and T is 5:5:3:2.
(g) Creditors include ₹ 5000 received as commission from A.
Give the necessary journal entries to incorporate the above changes. Also, prepare the capital accounts of partners
and balance sheet of the new firm.

Q4. Annie and Bonnie are partners in a firm, sharing profits and losses equally. Their Balance Sheet as at 31st
March, 2017 was as follows: -

(a) Bad debt amounting, to ₹ 1500 to be written off.

(b) Stock to be taken over by Annie at ₹ 12,000.
(c) Plant and Machinery to be valued at ₹ 50,000.
(d) Goodwill of the firm to be valued at ₹ 20,000.
(e) Carl to bring in ₹ 50,000 as his capital. He was unable to bring in cash, his share of goodwill.
(f) General Reserve not to be distributed. For this, it was decided that Carl would compensate the old partners
through his current account. You are required to: -
(i) Pass journal entries on the date of Carl’s admission. (ii) Prepare the Balance sheet of the reconstituted firm.

Q5. David and Bimal are partners sharing profits and losses in the ratio of 3:2. Their Balance Sheet as at 31st March,
2010 was as follows: -

They admitted Chander as a new partner on 1.4.2010 and the new profit-sharing ratio became 5:3:2. Chander
introduced a capital of ₹ 16,000. 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. The following revaluations
were made at the time of Chander’s admission: -
(a) Stock has been overvalued by ₹ 750 and furniture by ₹ 500.
(b) Provision for doubtful debts is to be increased by ₹ 100.
(c) A creditor for ₹ 2350 was paid off by Bimal privately for which he was not to be reimbursed.
Prepare the Revaluation Account, Partner’s Capital Account and Balance Sheet of the new firm.

Q6. Smita and Punita are partners in a firm sharing profits and losses in the ratio of 3:2. Their Balance Sheet as at
31st March, 2019 is as follows: - Balance sheet of Smita & Punita
as at 31st March, 2019
On 1st April, 2019 Mita is admitted as a new partner on the following terms:-
(a) The new profit-sharing ratio of Smita, Punita and Mita to be 5:3:2.
(b) Provision for doubtful debts to be raised to 10% of the debtors.
(c) Punita to take over the firm’s Investment (not recorded in books) at ₹ 3,000.
(d) Goodwill of the firm to be valued at ₹ 50,000, Mita to bring in cash for her share of goodwill.
(e) 50% of the goodwill to be withdrawn by the old partners.
(f) Mita to pay off the Bank loan on behalf of the firm. The amount due to her by the firm, to be considered as part of
her capital contribution.
(g) Mita to bring in the balance of her capital in cash, so as to make her capital equal to 1/5 th of the total capital of the
firm. You are required to: -
(i) Pass Journal entries at the time of Mita’s admission. (ii) Prepare the Balance Sheet of the reconstituted firm.

Q7. Neha and Tara are partners in a firm sharing profits and losses in the ratio of 3:2. The Balance Sheet as at 31st
March, 2012 stood as follows: -

They agreed to admit Prachi into partnership for 1/5th share of profits on 1st April, 2012, on the following terms:-
(a) All debtors to be considered as good and therefore the provision for doubtful debts to be written back.
(b) Value of land and building to be increased to ₹ 8,000.
(c) Value of plant and machinery to be reduced by ₹ 2,000.
(d) The liability against workmen compensation fund is determined at ₹ 2,000 which is to be paid later in the year.
(e) Prachi to bring in her share of goodwill of ₹ 10,000 in cash.
(f) She will further bring in cash so as to make her capital equal to 20% of the total capital of the new firm. You are
required to prepare: -
(i) Revaluation Accounts (ii) Partner’s capital Accounts (iii) Balance sheet of the Reconstituted firm

Q8. Angad and Vivek are partners in a firm sharing profits and losses in the ratio of 3:2. Their Balance Sheet as at 1 st
January, 2005 stood as follows: -

Capital is admitted as a partner on the above date on the following terms: -

(a) He will pay ₹ 10,000 towards Goodwill for 1/4 th share in profits.
(b) The assets are to be revalued as under: - Plant ₹ 32,000; Stock ₹ 18,000
(c) A provision for bad debt at 5% on debtors has to be created.
(d) A sum of ₹ 1400 included in creditors is not to be paid. There is an unrecorded liability for ₹ 5,000 which is to be
recorded in the books.
(e) Gopal is to bring ₹ 20,000 as capital. The capitals of other partners are to be adjusted in the new profit-sharing
ratio. For this purpose, current accounts are to be opened.
Prepare: - (i) The capital accounts of Angad, Vivek and Gopal. (ii) The Balance Sheet of the new firm.
Q9. Juliet and Ragini are partners in a firm, sharing profits and losses in the ratio of 3:1. On 31 st March, 2016 their
Balance Sheet was at under: - Balance sheet
as at 31st March, 2016

Milk was taken as a partner for 1/4th share with effect from 1st April, 2016, subject to the following adjustment: -
(a) Plant & machinery was found to be overvalued by ₹ 16,000. It was to be shown in the books at the correct value.
(b) Provision for doubtful debts was to be reduced by ₹ 2,000.
(c) Goodwill of the firm was valued at ₹ 60,000. Milk was to be bring in cash his share of goodwill.
(d) Capital Accounts of Juliet and Robin were to be re-adjusted in the new profit-sharing arrangement on the basic of
Mike’s capital, any surplus to be adjusted through current account and any deficiency through cash along with his
capital of ₹ 100,000.
(e) Creditors included an amount of ₹ 2,000 received as commission.
The necessary adjustment was required to be made. You are required to prepare: -
(i) Revaluation account (ii) Partner’s capital account (iii) Balance sheet of the reconstituted firm.

Q10. Anil and Sunil are partners sharing profit and losses in the ratio of 3:2. They admit Charan as a new partner
from 1st April, 2013. Anil gives 1/3rd of his share while Sunil gives 1/10th from his share to Charan. Their Balance
Sheet as on 31st March, 2012 is given below: -

Terms of Charan’s admission are as follows: -

(a) Charan’s bring in ₹ 30,000 as his capital. His share of Goodwill was determined to be ₹ 18,000. He could bring
in only 60% of his share.
(b) Land and building were found to be undervalued by ₹ 10,000 stock was found overvalued by ₹ 7,000 and
provision for doubtful debts is to be made equal to 5% of the debtors.
(c) Capital accounts of the old partners to be re-adjusted in the new profit-sharing arrangement on the basis of
Charan’s capital, any excess or deficiency to be adjusted in cash.
You are required to: -
(i) Pass Journal entries (ii) Prepare Partner’s capital accounts (iii) Balance sheet of the new firm.