Chapter: - 4

ADMISSION OF A PARTNER
Meaning of Admission of a Partner
A new partner can be admitted only with the consent of all the existing partners unless otherwise agreed upon.
A person who is admitted as a partner into a firm does not thereby become liable for any act of the firm, done
before he became a partner. Such a partner is known as incoming or a new partner.
Purposes of Admission of a Partner
A new partner may be admitted for any one or more of the following purposes:
i). For procuring additional capital.
ii). For acquiring additional managerial skill.
iii). For progress of the firm.
iv). For reducing competition.
Effects of Admission of a Partner
A newly admitted partner acquires two main rights in the firm:
i). Sharing in the future profits of the firm: - for the acquisition of this right, he is generally required to
bring his share of goodwill (also called premium) which is to be shared by the old partners because they
sacrifice a part of their share of profit in favor of the new partner.
ii). Sharing in the assets of the firm: - To acquire this right, he usually brings in an agreed amount of capital
either in cash or in kind.
Adjustments at the time of Admission of a partner
When a partner is admitted into partnership firm, a number of adjustments have to be made in the books of the
firm. The usual adjustments can, thus, be enumerated as under:
i). New profit Sharing Ratio of all the partners.
ii). Sacrificing Ratio of the Old Partners.
iii). Revaluation of Assets and Liabilities.
iv). Accounting Treatment of Goodwill.
v). Accounting Treatment of Reserve and Profits.
vi). Accounting Treatment of New Partners’ Capital.
vii). Adjustment of Capital Accounts.

CALCULATION OF NEW PROFIT SHARING RATIO AND SACRIFICING RATIO

Calculate the new ratio of the following:
Old Partner’s Old New Partner’s New Partner’s Future Sacrificing
Name Ratio Name Share Ratio Ratio
Ques.1. X and Y 3:2 Z 1/4th - -
Ques.2. A and B 5:3 C 1/5th - -
Ques.3. P, Q and R 5:3:2 A 1/3rd - -
Ques.4. X and Y 3:2 Z 1/4th - -
Ques.5. A and B 5:3 C 1/6th - -
Ques.6. X and Y 3:2 Z 1/4th 2:1 -
Ques.7. A and B 5:3 C 1/5th 3:2 -
Ques.8. P, Q and R 5:3:2 A 1/3rd 3:2:1 -
Ques.9. X and Y 3:2 Z 1/4th 1:2 -
Ques.10. A and B 5:3 C 1/6th 3:1 -
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 Ques.11. X and Y 3:2 Z 1/4th - 2:1
Ques.12. A and B 5:3 C 1/5th - 3:2
Ques.13. P, Q and R 5:3:2 A 1/3rd - 3:2:1
Ques.14. X and Y 3:2 Z 1/4th - 1:2
Ques.15. A and B 5:3 C 1/6th - 3:1

Ques.16. A and B are partners sharing profit in the ratio of 3:2. They admit C for 1/4 th share. Calculate new
Profit sharing ratio. (Ans. 9:6:5)
Ques.17. Ram and Shyam are partner sharing profit in the ratio of 5:3. They admit Mohan into the firm for
1/5th share. Calculate New Profit sharing ratio.
Ques.18. A and B are partners sharing in profits 3/5 and 2/5. They admit C giving him 1/6 th share. Find the
future profit sharing ratio of partners. (Ans. 3:2:1)
Ques.19. A, B and C are partners sharing profits in the ratio of 5/12: 1/3: 1/4. They admit D for 1/8 share. Find
out the new profit sharing ratio. (Ans. 35: 28: 21: 12)
Ques.20. A and B are partners sharing profits and losses in the ratio of 3: 2. They admit C into partnership
giving him 1/5 share in profits, which he acquires from A, and B in the ratio of 2: 1. Calculate the
new profit sharing ratio. (Ans. 7: 5: 3)
Ques.21. A and B are partners sharing profits and losses in the ratio of 3: 2. C was admitted as a partner. A
surrendered 1/3rd of his share and B surrendered ½ of his share in favour of C. Calculate the new
profit sharing ratio. (Ans. 2: 1: 2)
Ques.22. A, B and C are partners sharing profits and losses in the ratio of 3: 2: 1. D is admitted. He gets 1/6th
share entirely from A. Calculate new profit sharing ratio. (Ans. 2: 2: 1: 1)
Ques.23. A and B are partners sharing profits in the ratio of 7: 3. C was admitted as a partner the new profit
sharing ratio among A: B: C being 3: 1: 1. Find out the sacrifice ratio. (Ans. 1: 1)
th
Ques.24. A and B are partners sharing in the ratio of 5: 3. They admit C for 1/4 share and agree to share
between them in the ratio of 2: 1 in future. Calculate the sacrifice ratio and new ratio.
(Ans. New ratio 2: 1: 1 Sacrificing ratio 1: 1)
Ques.25. A and B are partners sharing profits in the ratio of 3: 2. C is admitted into the partnership with 1/4th
share of future profits. Calculate the new profit sharing ratio and the sacrifice ratio.
(Ans. New ratio 9:6:5 Sacrificing Ratios 3:2)
Ques.26. X, Y and Z are partners in a business sharing profits and losses in the ratio of 6: 5: 3 respectively.
They admit P as a partner and give him 1/8 share of profit. Calculate then new profit sharing ratio.
(Ans. 6: 5: 3: 2)
Ques.27. X and Y are partners in a firm sharing profits and losses in the ratio of 3: 2. They admitted Z into the
partnership with 1/5th share in the profits. Calculate the new profit sharing ratio. (Ans. 12: 8: 5)
Ques.28. A and B are partners sharing profits in the ratio of 5: 3. C is admitted into the partnership for 1/4 th
share of future profits. Calculate the new profit sharing ratio. (Ans. 15: 9: 8)
Ques.29. A and B are partners sharing profits in the ratio of 21: 9. C is admitted on 9/21 st share of profits.
Calculate the new profit sharing ratio. (Ans. 14: 6: 15)
Ques.30. X and Y are partners in a firm sharing profits and losses in the ratio of 9: 6. A new partner Z is
admitted. X surrenders 3/15th share of his profit in favor of Z and Y 6/15 of his share in favour of Z.
Calculate the new profit sharing ratio. (Ans. 12: 6: 7)
Ques.31. X and Y are partners in a firm sharing profits in the ratio of 3: 2. They admitted Z into partnership
with 1/8th share of profits. It is decided that X and Y will share profit and losses in future in the ratio
of 4: 3. Calculate the new profit sharing ratio. (Ans. 4: 3: 1)
Ques.32. A and B are partners sharing profits and losses in the ratio of 3: 1. They agree to admit C into the
partnership who gets 1/8th share. He acquired his share as to 1/32 from A and 3/32 from B. Calculate
the new profit sharing ratio. (Ans. 23: 5: 4)

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Ques.33. A, B, C and D are partners sharing profits losses in the ratio of 36: 24: 20: 20 respectively. E joins in
the partnership for 20% share, A, B, C and D would in future share profits among themselves as 3/10,
4/10, 2/10, 1/10. Calculate the new profit sharing ratio. (Ans. 6: 8: 4: 2: 5)
Ques.34. Birjender and Narender are partners in a firm sharing profits in the ratio 3: 2. They admit Surendra as
a partner for 1/4th share in the profits. Surender acquires his share from Bijender and Narender in the
ratio of 2: 1. (Ans. 26: 19: 15)
Ques.35. X and Y sharing profits in the ratio of 7: 3. Admit Z on 3/7 share in the firm which he takes 2/7 from
X and 1/7 from Y. Calculate the new profit sharing ratio. (Ans. 29: 11: 30)
Ques.36. A and B are partners sharing profits and losses in the proportion of 7: 5. They agree to admitted C
their manager into partnership who is to get 1/6th in the profits. He acquires this share as 1/24 from A
and 1/8 from B. Calculate the new profit sharing ratio. (Ans. 13: 7: 4)
Ques.37. A and B are partners in a firm sharing profits and losses in the ratio of 3: 2. A new partner C is
admitted. A surrenders 1/5th share of his profit in favour of C and B 2/5th of share in favour of C.
Calculate the new profit sharing ratio. (Ans. 12: 6: 7)
Ques.38. X and Y shared profits in the ratio of 7: 3. Z was admitted as a partner. X surrendered 1/7th of his
share and Y 1/3rd of his hare in favour of Z. Calculate the new profit sharing ratio. (Ans. 3: 1: 1)
Ques.39. A and B are partners in a firm sharing profits and losses in the ratio of 3: 2. C joins the firm for a
quarter shares in the future profits. Ascertain their future profit sharing ratio of partners in each of the
following cases:
1. If he acquires his share of profits from the original partners in their profit sharing ratio.
2. If he acquires his share of profits from the original partners equally.
3. If he acquires his share of profits from the original partners in the ratio of 2: 3.
(Ans. (1.) 9 : 6: 5 (2.) 19: 11: 10 (3.) 10: 5: 5)

TREATMENT OF GOODWILL
Ques.1. A and B sharing profits in the ratio of 5: 3, admit C who brings in Rs.1,40,000 as his capital and
Rs.96,000 as goodwill. The new profit sharing ratio will be 7: 5: 4. Pass journal entries
(Ans. Sacrificing Ratio 3: 1)
Ques.2. A and B are partners in a firm sharing profit and losses in the ratio of 5: 3. C is admitted in the
firm for 1/5th share of profits. He is to bring Rs.12,000 as capital and Rs.2,400 as his share of goodwill.
Give the necessary Journal entries. (Ans. Sacrificing Ratio 5: 3)
Ques.3. X and Y are partners in firm sharing profits and losses in the ratio of 3: 2. They decide to admit Z
into partnership with 1/4th share in profits. Z will bring Rs.18,000 for capital and the requisite amount of
premium in cash. The goodwill of the firm is value at Rs.12,000. The new profit sharing ratio becomes
2: 1: 1. X and Y withdraw their share of goodwill. Give necessary journal entries.
(Ans. Sacrificing Ratio 2: 3)
Ques.4. A and B are partners sharing profit and losses in the ratio of 3: 2. They admit C as a new partner
for 1/5th share of profit. The goodwill is valued at Rs.30,000. C brings in the necessary amount of
premium. Pass the necessary journal entries in the books of the firm on the assumption that no goodwill
account is raised and the premium brought by C is retained in business. (Ans. Sacrificing Ratio 3: 2)
Ques.5. A and B are the partners sharing profit and losses in the ratio of 7: 3. C is admitted as a new
partner for 3/7th share, which he acquires, 2/7th from A and 1/7th from B. C brings in Rs.24,000 as capital
and Rs.9,000 as his share of goodwill. No goodwill appears in the books. Pass the necessary journal
entries in the books of the firm. (Ans. Sacrificing Ratio 2: 1)
Ques.6. A and B are partners in a firm. Their profits sharing ratio is 5: 3. They admit C into future. C
brings in Rs.12,000 as capital and Rs.6,000 as premium. Calculate the sacrificing ratio and pass the
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 necessary journal entries on the assumption that the amount of premium brought in by C will be shared
by A and B and pass journal entries on the assumption that the amount of premium brought by C is
retained in business. (Ans. Sacrificing Ratio 1: 0)
Ques.7. A and B sharing profits in the ratio of 3: 2 admit C into partnership C paying Rs.10,000 as
goodwill for 1/4th share and Rs.10,000 as capital. No goodwill account appears in the books. Partners
withdraw the amount of goodwill. Give journal entries to record these transactions.
Ques.8. N and H are partners in the firm sharing profits in the proportion of 2: 1. They admit R as partner
with 1/4th share of profits. He brings in Rs.24000 as his share in goodwill of the firm. The new profit
sharing ratio is N 13/24, H 5/24 and R ¼. R does not bring any capital. Pass the necessary journal entries
to record the above.
Ques.9. A and B are partners sharing profits in the ratio of 3: 2. They admit C into firm for 3/7 th profit,
which he takes 2/7th from A and 1/7 from B and brings Rs.1,000 as premium out of his share of Rs.1,800
and Rs.6,800 as his capital. Goodwill account does not appear in the books of A and B. Make Journal
Entries.
Ques.10. X, Y and Z were partners sharing profits and losses as to X 1/2, Y 1/3 and Z 1/6. As from 1st
January, 1978 they admit A into partnership for a 1/6 share in profits and losses which he acquires
equally form X and Y and he bring Rs.20,000 for his capital and Rs.10,000 as premium for goodwill. A
paid in his capital money but in respect of premium for goodwill he could bring in only Rs.5,000. Give
the Journal entries t carry out the above arrangements.
Ques.11. A and B shared profits in the proportion of 3:2 had capitals of Rs.2000 and Rs.15,000
respectively. They agree to admit C into partnership as from 1st January, 1960 on the following terms in
return for third share in the future profits:
1. That C should bring in Rs.20,000 in capital:
2. That as C is unable to bring his share of goodwill in cash the goodwill of the firm be valued at
Rs.15,000.
Pass necessary journal entries.
Ques.12. A and B are partners sharing profits in the ratio of 3: 2. Their books showed goodwill at Rs.2000.
C is admitted with 1/4th share of profits and bring Rs.10000 as his capital but is not able to bring in cash
for his share of goodwill Rs.3000. Give necessary journal entries in the book of firm.
Ques.13. P and S are partners sharing profits and losses in the ratio of 3: 2. Their books showed Goodwill
at Rs.20000. R is admitted with 1/5 share which he acquires equally from P and S. R bring Rs.20000 as
his capital and Rs.10000 as his share of goodwill. Give necessary Journal entries.

Ques.14. X and Y are partners sharing profits and losses in the ratio of 3: 2. C admitted for 1/4th share and
he will bring Rs.40,000 as capital and Rs.5,000 as premium. There was a goodwill account in the books
of old firm which was valued at Rs.15,000. Pass necessary Journal entries. (Ans. Sacrificing Ratio 3: 2)
Ques.15. A, B and C are partners sharing profits and losses in the ratio of 5: 3: 2. D admitted for 1/4 th
share for which he will bring Rs.15,000 as his share of goodwill but unable to bring his share of
goodwill in cash i.e. Rs.4,000. There was a goodwill account in the books of the old firm (Balance
Sheet) at Rs.12,000. Amount of goodwill brought by D withdrawn by A, B and C. Pass necessary
Journal entries.
Ques.16. Raj and Rahul are partners sharing profits and losses in the ratio of 7: 3. They admitted Rohan in
the partnership for 3/7th share in the firm, which he takes 2/7th from Raj and 1/7 from Rahul. Rohan will
bring Rs.21,000 as his capital and Rs.9,000 as his share of premium. Goodwill in the books of old

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 Balance Sheet valued at Rs.40,000. Amount of premium brought by Rohan remains in the business. Pass
the journal entries in the books of the Raj and Rahul. (Ans. Sacrificing Ratio 2: 1)
Ques.17. Naresh and Suresh are partners sharing profit and losses in the ratio of 3:2. Ramesh admitted for
1/5th share which sis sacrifice by Naresh and Suresh in equal proportion. Ramesh will bring Rs.30,000 as
his capital and unable to bring his share of premium in cash i.e. Rs.6,000. Half amount of premium
withdrawn by the sacrificing partners, which brought by Ramesh. Pass necessary Journal entries.
(Ans. Sacrificing Ratio 1: 1)
Ques.18. Sachin and Sehwag are partners sharing profit and losses in the ratio of 5: 3. Kaif admit and
sachin gives 1/4th of his share and sehwag gives 1/4th of his share to Kaif. Kaif will be bring his share of
capital in cash which Rs.50000 and furniture of Rs.16000 as premium. There was a goodwill account in
book of old firm at Rs.32000. Pass Journal entries. (Ans. Sacrificing Ratio 5: 3)
Ques.19. Azar and Zaheer are partners sharing profits and losses in the ratio of 4: 3. Irfan joining and New
ratio among Azar, Zaheer and Irfan is 7: 4: 3. Irfan will bring Rs.35,000 as his share of capital and bring
half of his share of premium in cash. Goodwill of New firm be valued at Rs.42,000. There was a
goodwill account stood at Rs.14000 in the old books. Pass necessary journal enteries.
(Ans. Sacrificing Ratio 1: 2)
Ques.20. Ram, Shyam and Mohan are partners sharing profits and losses in the ratio of 7: 2: 1.
Ghanshyam admitted for 1/4th share. He will bring Rs.60,000 as his capital and stock costing Rs.10,000
for his share of premium, 1/4th of which withdrawn by the sacrificing partners. There was a goodwill in
the books of the old firm valued at Rs.40,000. Pass necessary Journal entries. (Ans. Sacrificing
Ratio 7: 2: 1)

****The End****

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