Who should compensate to whom in case of a change in profit sharing ratio of existing partners?

Why are the 'Reserve and Surplus' distributed at the time of reconstitution of the firm?

On 1.3.2006 A and C admitted D into the partnership, their profit sharing ratio being 5:4:3 respectively. Assuming before admission, the profit sharing ratio of A and C was equal find the sacrifice ratio.

A and B are partners in a firm sharing profits and losses in the ratio of 3:2. They admit C into partnership for 1/5th share. C brings Rs.30,000 as capital and Rs.10,000 as goodwill. At the time of admission of C goodwill appears in the balance sheet of A and B at Rs.3,000. New profit sharing of the partners shall be 5:3:2. Pass necessary entries in the books of new firm.

Ram and Mohan were partners in a firm sharing profits in the ratio of 4:1. On 01.03.2015 they admitted Sohan as a new partner for 1/3rd share in the profits of the firm. They fixed the new profit sharing ratio 4:2:3. On the date of Sohan;s admission, the firm had a Contingency Reserve balance of Rs.20,000 and profit and Loss account balance of Rs.32,00(Dr.). The firm also had a reserve of Rs.1,00,000. Sohan is to bring Rs.60,000 as premium for his share of goodwill. Showing your calculations clearly, pass necessary journal entries to record the above transactions. 

A and B were partners in a firm. They were trading in artificial limbs. On 1st April,2015, they admitted C, a good friend of B into the partnership. C lost his one hand in an accident and A and B decided to give one artificial hand free of cost to C. The balance sheet of A and B as at 31st March, 2015 was as follows
                                             Balance Sheet
                                      as at 31st March, 2015

C was admitted in the firm on the following terms
(i) C will bring RS.4,00,000 as his share capital, but he was unable to bring any amount for goodwill.
(ii) The profit sharing ratio between A, B and C will be 3:2:1.
(iii) Claim on account of workmen compensation was RS.30,000.
(iv) To write-off bad debts amounted to RS.40,000.
(v) Creditors were to be paid RS.20,000 more.
(vi) Outstanding expenses be brought down to RS.12,000.
(vii) RS.20,000 be provided for an unforeseen liability.
(viii) Goodwill of the firm was valued at RS.1,80,000.
Prepare revaluation account, capital accounts of partners and the balance sheet of new firm. Also identify any two values which partners wanted to communicate to the society.

On 31st March, 2015, the balance sheet A and B, who shared profits in 3:2 ratio, was as follows
                                            Balance Sheet
                                   as at 31st December, 2015

On this date, C was admitted as a partner on the following conditions
(i) C will get 4/15th share of profits.
(ii) C had to bring RS.30,000 as his capital to which amount other partners' capitals shall have to be adjusted.
(iii) He would pay cash for his share of goodwill which would be based on 2.5 years' purchase of average profits of past 4 years.
(iv) These assets would be revalued as under Sundry debtors at book value less 5% provision for Bad debts, stock at RS.20,000, plant and machinery at RS.40,000.
(v) The profits of the firm for the years' ending on 31st March, 2012, 2013 and 2014 were RS.20,000, RS.14,000 and RS.17,000, respectively.
Prepare revaluation account, partners' capital accounts and balance sheet of a new firm.

P and Q are partners in a firm sharing profits in the ratio of 3:2. They decide to admit R as a new partner with effect from 1st April, 2015. In future, profits will be shared equally. The balance sheet of P and Q as at 1st April, 2015 and the terms of admission are
                                         Balance Sheet
                                     as at 1st April, 2015

(i) Capital of the firm is fixed at RS.6,00,000 to be contributed by partners in the profit sharing ratio. The difference will be adjusted in cash.
(ii) R to bring in his share of capital and goodwill in cash. Goodwill of the firm is to be valued on the basis of two years' purchase of super profit. The average net profits expected in the future by the firm RS.90,000 per year. The normal rate of return on capital in similar business is 10%.
(iii) The partners agreed to give help and maintain the plants and keep the area clean.
Calculate goodwill and prepare partners' capital accounts and bank account. Identify the values conveyed in the question.

Why is it necessary to adjust goodwill at the time of change in profit sharing ratio?

Find out new profit sharing ratio and sacrificing ratio for each of the condition specified below
(i) Dinesh and Mahesh are partners in a firm sharing profits in the ratio of 4:3. Mukesh joins the business. Dinesh surrenders 1/4th of his share and Mahesh surrenders 1/3rd of his share in favour of Mukesh.
(ii) Kapil and Sidhu are partners in a firm sharing profits in the ratio of 2:1. Dhoni is admitted in the firm for 1/3rd share which he acquires 2/3rd from Kapil and 1/3rd from Sidhu.
(iii) Kamakshi, Divij and Ayaan are partners sharing profits in the ratio of 2:3:3 Lavanya is admitted for 2/5th share it is agreed that Kamakshi will retain her original share.
(iv) Ganga and Yamuna are partners in a firm sharing profits in the ratio of 2:1. Saraswathi and Narmada are admitted for 1/6th and 1/8th shares respectively.
(v) Kunal and Ranbir are partners who share profits in the ratio of 3:1 Katrina is admitted as a new partner for 1/5th share. Kunal and Ranbir decide that they will share future profits equally.

Manish and Nirjhar are partners sharing profits in the ratio of 4:1. Manish surrenders 1/4th from his share and Nirjhar surrenders 1/5th of his share in favour of Vardaan. Calculate the new ratio and sacrificing ratio.

A,B and C are partners in a firm sharing profits and losses in the ratio of 3:3:2 Their balance sheet as 31st March,2015 was as under 
                                                Balance Sheet 
                                            as at 31st March,2015

Partners decided that with effect from 1st April,2015 they would share profits and loses in the ratio of 4:3:2.It was agreed that
(i) Stock is to be valued at Rs 2,20,000 
(ii) Machinery is to be depreciated by 10%.
(iii) A provision for doubtful debts is to be made on debtors @ 5%.
(iv) Building to be appreciated by 20%
(v) A liability for Rs 6,000 included in sundry creditors is not likely  toarise.
Partners agreed that revised values of assets and liabilities are to be recorded in the books.Give the necessary accounting entries to be made in the books of the firm on account of change in profit sharing ratio.Also prepare the revaluation account

A and B are partners in a firm sharing profits in the ratio of 3:2. Their Balance Sheet as at 31st March, 2014 stood as under:

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

(i)C brings capital proportionate to his share. He brings Rs.7,000 in cash as his share of goodwill.

(ii)Debtors are all good.

(iii)Depreciate stock by 5% and furniture by 10%.

(iv)An outstanding bill for repairs Rs.1,000 will be brought in books.

(v)Half of the investments were to be taken over by A and B in their profit sharing ratio at book value.

(vi)Bank loan is paid off.

(vii)Partners agreed to share future profits in the ratio of 3:3:2

Prepare Revaluation Account, PartnersCapital Accounts and Balance Sheet after admission of C into the partnership.

Singh,Gupta and Lal are partners in a firm sharing profits in the ratio of 3:2:3. They admitted Jain as a new partner. Singh surrendered 1/3rd of his share in favour of Jain. Gupta surrendered 1/4th of his share in favour of Jain and Lal surrendered 1/5th of his share in favour of Jain. Calculate the new profit sharing ratio.

Amit and Viney are partners in a firm sharing profits and losses in 3:1 ratio. On 1st January, 2015, 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.

Mohit and Naman were partners in a firm sharing profits in the ratio of 3:1. Omkar was admitted as a partner for 1/5th share in profits on 1st January, 2016.From the information given below, complete revaluation account, partners' capital accounts and the balance sheet of the new firm.
Dr                                         Revaluation Account                                              Cr

Dr                                        Partner's Current Account                                                                                           Cr

                                           Balance Sheet (After admission)
                                                  as at 1st January, 2015

The following is the balance sheet as at 31st December, 2014 of A and B, who share profits and losses in the ratio of 3:2.
                                            Balance Sheet
                                   as at 31st December, 2014

On 1st January, 2015, they agreed to admit C into Partnership on the following terms
(i) Provision of doubtful debts would be increased by  RS.2,000.
(ii) The value of land and building would be increased to RS.18,000.
(iii) The value of stock would be increased by RS.4,000.
(iv) A worker being injured in the factory, and a claim of RS. 2,000 was declared for him.
(v) C brought in as his share of goodwill RS.10,000 in cash.
(vi) Capital account 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.

The following is the balance sheet of S and M who share profits and losses in the ratio of 3:2.
                             Balance Sheet
                       as at 31st March, 2015

On the following conditions, T was admitted on 1st April, 2016 as the third partner.
(i) Machinery was found overvalued by 25%.
(ii) S takes overland at RS.22,000.
(iii) M assumes to pay off bills payable at an agreed value of RS.14,000.
(iv) A reserve of 4% is to be created on debtors.
(v) T brings RS.40,000 as his capital and gets 1/5th share in future profits.
(vi) Goodwill of the firm is valued at RS.1,00,000 but he was unable to bring his share of goodwill in cash.
Prepare the revaluation account, partners' capital accounts and balance sheet.

(When assets and liabilities have to be shown in their original values and goodwill is also required to be adjusted)
Z, E and N are partners sharing profits and loses in the ratio of 3:2:1 Their balance sheet as on 31st December 2014 
                                                  Balance Sheet
                                             as at 31st December,2014

The partners agreed that from 1st January,2015,they will share profits and loses in the ratio of 4:4:1 They agreed that
(i) Stock is to be valued at 20 % less
(ii) Provision for doubtful debts to be increased by Rs 3,000
(iii) Furniture is to be depreciated by 20% and plant and machinery by 15%
(iv) Rs 7,000 are outstanding for salaries
(v) Land and buildings are to be valued at Rs 7,00,000
(vi) Goodwill is valued at Rs 90,000
Partners do not want to record the altered values of assets and liabilities in the books.They also decided not to show goodwill in the books.
You are required to pass a single journal entry to give effect to the above.

The balance Sheet of Modi,Gandhi and Yadav who share profits in the ratioof 2:2:1 is given below
                                            Balance Sheet
                                        as at 31st March,2015

On 1st April,2015, they decide that in (i)Stock is for future, they will share profits in the ratio of 3:2:1, the following adjustments are agreed upon.
(i) Stock is found to be undervalued by 10%.
(ii)Building will be appreciated by Rs 50,000.
(iii)Machinery and furniture and fittings will be depreciated by 5% and 10% respectively.
(iv)Goodwill will be valued at 2 year's purchase of average profits of last 3 years which were Rs 2,00,000, Rs 2,25,000 and Rs 3,75,000 respectively.The profit of Rs 3,75,000 includes profit on sale of machinery Rs 5000.
(vi)Claim on account of workmen compensation is estimated to be Rs 60,000.Prepare revaluation account, partners' capital accounts and the balance sheet of the new firm.