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12th Accountancy - Admission of a Partner Model Question Paper

Published on: 27/11/2019

Admission of a Partner

Download Tamil Nadu 12th Standard Accountancy question papers, model tests, one-mark questions, important questions, and public exam papers in PDF format. Free study materials and answer keys for TN State Board students.

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Std: 12th Standard - Accountancy

chapter: - Model Question paper

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Questions:

Generic 3

3 x 3 = 9

Sam and Jose are partners in a firm sharing profits and losses in the ratio of 3:2. On 1st April 2018, they admitted Joel as a partner. On the date of Joel’s admission, goodwill appeared in the books of the firm at Rs. 30,000. By assuming fluctuating capital method, pass the necessary journal entry if the partners decide to
(a) write off the entire amount of existing goodwill
(b) write off Rs. 20,000 of the existing goodwill.

Varun and Barath are partners sharing profits and losses 5:4. They admit Dhamu into partnership. The new profit sharing ratio is agreed at 1:1:1. Dhamu’s share of goodwill is valued at Rs. 15,000 of which he pays Rs .10,000 in cash. Pass necessary journal entries for adjustment of goodwill on the assumption that the fluctuating capital method is followed.

Rajesh and Ramesh are partners sharing profits in the ratio 3:2. Raman is admitted as a new partner and the new profit sharing ratio is decided as 5:3:2. The following revaluations are made. Pass journal entries and prepare revaluation account.
(a) The value of building is increased by Rs. 15,000.
(b) The value of the machinery is decreased by Rs. 4,000.
(c) Provision for doubtful debt is made for Rs. 1,000.

Generic 5

5 x 5 = 25

Kavitha and Radha are partners of a firm sharing profits and losses in the ratio of 4:3. They admit Deepa on 1.1.2019. On that date, their balance sheet showed debit balance of profit and loss account being accumulate loss
Rs. 1,40,000 on the asset side of the balance sheet. Give the journal entry to transfer the accumulated loss on admission.

Eswari and Ranikumari are partners sharing profits and losses in the ratio of 7:5. They agree to admit Chitra into partnership. Eswari surrenders \(\frac{1}{7}\) th of her share and Ranikumari \(\frac{1}{5}\) th of her share in the favour of Chitrao Calculate the New profit ratio and the sacrificing ratio.

The balance sheet of Rekha and Mary on 31st March 2018 is as follows:

Liabilities	Rs.	Rs.	Assets	Rs.
Capital accounts			Buildings	50,000
Rekha	50,000		Stock	8,000
Mary	30,000	80,000	Sundry debtors	60,000
General reserve		40,000	Cash at bank	32,000
Workmen compensation fund		10,000
Sundry creditors		20,000
		1,50,000		1,50,000

They share the profits and losses in the ratio of 3:1. They agreed to admit Kavitha into the partnership firm for 1/4 share of profit which she gets entirely from Rekha.
Following are the conditions:
(i) Kavitha has to bring Rs. 20,000 as capital. Her share of goodwill is valued at 4,000. She could not bring cash towards goodwill.
(ii) Depreciate buildings by 10%
(iii) Stock to be revalued at Rs. 6,000
(iv) Create provision for doubtful debts at 5% on debtors
Prepare necessary ledger accounts and the balance sheet after admission.

Anand and Balu are partners in a firm sharing profits and losses in the ratio of 7:3. Their balance sheet as on 31st March, 2018 is as follows:

Liabilities	Rs.	Rs.	Assets	Rs.
Capital accounts:			Land	60,000
Anand	50,000		Stock	40,000
Balu	30,000	80,000	Debtors	20,000
Sundry creditors		20,000	Cash in hand	10,000
Profit and loss A/c		30,000
		1,30,000		1,30,000

Chandru is admitted as a new partner on 1.4.2018 by introducing a capital of Rs. 20,000 for 1/4 share in the future profit subject to the following adjustments:
(a) Stock to be depreciated by Rs. 3,000
(b) Provision for doubtful debts to be created for Rs. 2,000.
(c) Land was to be appreciated by Rs. 10,000
Prepare revaluation account and capital account of partners after admission.

Sriram and Raj are partners sharing profits and losses in the ratio of 2:1. Nelson joins as a partner on 1st April 2017. The following adjustments are to be made:
(i) Increase the value of stock by Rs. 5,000
(ii) Bring into record investment of Rs. 7,000 which had not been recorded in the books of the firm.
(iii) Reduce the value of office equipment by Rs. 10,000
(iv) A provision would also be made for outstanding wages for Rs. 9,500.
Give journal entries and prepare revaluation account.

Generic 2

6 x 2 = 12

The value of Plant and machinery increased by 10%. State whether revaluation account will be debited or credited.

10.

What is meant by admission of a partner?

11.

Vasu and Devi are partners sharing profits and losses in the ratio of 3:2. They admit Nila into partnership for 1/4 share of profit. Nila pays cash Rs. 3,000 towards her share of goodwill. The new ratio is 3:3:2. Pass necessary journal entry on the assumption that the fixed capital system is followed.

12.

Vimal and Athi are partners sharing profits in the ratio of 2:1. Jeyam is admitted for 1/4 share in the profits. Calculate the new profit sharing ratio and sacrificing ratio.

13.

Suresh and Dinesh are partners sharing profits in the ratio of 3:2. They admit Ramesh as a new partner. Suresh surrenders 1/5 of his share in favour of Ramesh. Dinesh surrenders 2/5 of his share in favour of Ramesh. Calculate the new profit sharing ratio and sacrificing ratio.

14.

Ravi and Kumar share profits and losses in the ratio of 7:3. Christy is admitted as a new partner with 3/7 share which he acquires 2/7 from Ravi and 1/7 from Kumar. Calculate the new profit sharing ratio and sacrificing ratio.

Multiple Choice Question

5 x 1 = 5

15.

When A and B sharing profits and losses in the ratio of 3:2, they admit C as a partner giving him 1/3 share of profits. This will 'be given by A and B.

(a)

Equality

(b)

In the ratio of their capitals

(c)

In the ratio of their profits

(d)

None of these

16.

The revaluation profit or loss is transferred to the old partner's capital accounts, in their __________

(a)

Old ratio

(b)

New ratio

(c)

Sacrifice ratio

(d)

Gain ratio

17.

When an unrecorded liabilities is brought into books, is results in

(a)

profit

(b)

loss

(c)

income

(d)

expense

18.

Which of the following statements is not true in relation to admission of a part _________.

(a)

Generally mutual rights of the partners change

(b)

The profits and losses of the previous years are distributed to the old partners

(c)

The firm is reconstituted under a new agreement

(d)

The existing agreement does not come to an end

19.

On revaluation, the increase in the value of assets leads to

(a)

Gain

(b)

Loss

(c)

Expense

(d)

None of these

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Answers Key:

Generic 3

3 x 3 = 9

(a) write off the entire amount of existing goodwill

Journal entry
Date	Particulars	Debit Rs.	Credit Rs.
2018 April 1	Sam's Capital (3/5) Dr	18,000
	Jose's capital (2/5) Dr	12,000
	To Goodwill A/c		30,000
	(Existing goodwill written off)

(b) write off Rs. 20,000 of the existing goodwill.

Journal Entry
Date	Particulars	Debit Rs.	Credit Rs.
2018 April 1	Sam's Capital A/c (3/5) Dr	12,000
	Joe's Capital A/c(2/5) Dr	8,000
	To Goodwill A/c		20,000
	(Existing goodwill written off to the extent of Rs. 20,000)

Calculation of sacrificing ratio
Sacrificing ratio = Old share - New share
Varun \(=\frac { 5 }{ 9 } =\frac { 1 }{ 3 } =\frac { 5-3 }{ 9 } =\frac { 2 }{ 9 } \)
Bharath \(=\frac { 4 }{ 9 } =\frac { 1 }{ 3 } =\frac { 4-3 }{ 9 } =\frac { 1 }{ 9 } \)
Therefore, sacrificing ratio is 2 : 1

Journal Entry
Particulars	Debit Rs.	Credit Rs.
Cash A/c Dr	10,000
Damn's capital A/c Dr	5,000
To Varun's capital A/c (2/3)		10,000
To Bharath's Capital A/c (1/3)		5,000
(Share of goodwill of Damu credited to old partner's capital account)

**Journal entries**
Particulars		Debit Rs.	Credit Rs.
Buildings A/c	Dr.	15,000
To Revaluation A/c (Appreciation in value of buildings recorded)			15,000
Revaluation A/c	Dr.	5,000
To Machinery A/c			4,000
To Provision for doubtful debts A/c (Decrease in assets recorded and provision made)			1,000
Revaluation A/c	Dr.	10,000
To Rajesh’s capital A/c			6,000
To Ramesh’s capital A/c (Profit on revaluation transferred)			4,000

**Dr. Revaluation Account Cr.**
Particulars	Rs.	Rs.	Particulars	Rs.
To Machinery A/c		4,000	By Buildings A/c	15,000
To Provision for doubtful debts A/c		1,000
To Profit on revaluation transferred to
Rajesh’s capital A/c (3/5)	6,000
Ramesh’s capital A/c (2/5)	4,000	10,000
		15,000		15,000

Generic 5

5 x 5 = 25

Journal entry
Date	Particulars		Debit Rs.	Credit Rs.
2019 January 1	Kavutha's capital A/c	Dr	80,000
	Radha's capital A/c	Dr	60,000
	To Profit and loss A/c			1,40,000
	(Accumulated loss transferred to old partner's capital account in the old profit sharing ratio)

Eswari :  Ranikumari : Chitra
Old ratio = 7 : 5 : -
Old share = \(\frac{7}{12}\) :    \(\frac{5}{12}\) : -
Surrender = \(\frac { 7 }{ 12 } \times \frac { 1 }{ 7 } \) : \(\frac { 5 }{ 12 } \times \frac { 1 }{ 5 } \) : -
=   \(\frac{1}{12}\) : \(\frac{1}{12}\) : -
New ratio= Old share - Surrender
=   \(\frac { 7 }{ 12 } -\frac { 1 }{ 12 } \) : \(\frac { 5 }{ 12 } -\frac { 1 }{ 5 } \) : -
= \(\frac{6}{12}\) :   \(\frac{4}{12}\) :   \(\frac{2}{12}\)
= 6 : 4 : 2
New ratio = 3 : 2 : 1
Sacrificing ratio = 1 : 1

**Dr. Revaluation Account Cr.**
Particulars	Rs.	Particulars	Rs.	Rs.
To Buildings A/c	5,000	By Loss on revaluation transferred to
To Stock A/c	2,000	Rekha’s capital A/c (3/4)	7,500
To Provision for bad debts A/c	3,000	Mary’s capital A/c (1/4)	2,500	10,000
	10,000			10,000

**Dr. Capital Account Cr.**
Particulars	Rekha Rs.	Mary Rs.	Kavitha Rs.	Particulars	Rekha Rs.	Mary Rs.	Kavitha Rs.
To Revaluation A/c	7,500	2,500	-	By Balance b/d	50,000	30,000	-
To Rekha’s				By Bank A/c	-	-	20,000
capital A/c	-	-	4,000	By General reserve A/c	30,000	10,000	-
(share of goodwill)				By Workmen
				compensation fund A/c	7,500	2,500	-
To Balance c/d	84,000	40,000	16,000	By Kavith
				capital A/c	4,000	-	-
				(share of goodwill)
	91,500	42,500	20,000		91,500	42,500	20,000
				By Balance b/d	84,000	40,000	16,000

**Balance Sheet as on 1st April 2018**
Liabilities	Rs.	Rs.	Assets	Rs.	Rs.
Capital accounts			Buildings	50,000
Rekha	84,000		Less: Depreciation	5,000	45,000
Mary	40,000		Stock	8,000
Kavitha	16,000	1,40,000	Less: Decrease	2,000	6,000
Sundry creditors		20,000	Sundry debtors	60,000
			Less: Provision for doubtful debts	3,000	57,000
			Bank (32,000+20,000		52,000
		1,60,000			1,60,000

**Dr. Revaluation Account Cr.**
Particulars	Rs.	Rs	Particulars	Rs.
To		3,000	By Land A/c	10,000
To Provision for doubtful debts		2,000
To Profit on revaluation transferred to
Anand’s capital A/c (7/10)	3,500
Balu’s capital A/c (3/10)	1,500	5,000
		10,000		10,000

**Dr. Capital Account Cr.**
Particulars	Anand Rs.	Balu Rs.	Chandru Rs.	Particulars	Anand Rs.	Balu Rs.	Chandru Rs.
To Balance c/d	74,500	40,500	20,000	By Balance b/d	50,000	30,000	-
				By Bank A/c	-	-	20,000
				By Revaluation A	3,500	1,500	-
				By Profit and loss A/c	21,000	9,000	-
	74,500	40,500	20,000		74,500	40,500	20,000
				By Balance b/d	74,500	40,500	20,000

**Journal entries**
Date	Particulars		Debit Rs.	Credit Rs.
2017	Stock A/c	Dr.	5,000
April 1	Investment A/c	Dr.	7,000
	To Revaluation A/c (Increase in the value of stock and unrecorded investment accounted)			12,000
"	Revaluation A/c	Dr.	19,500
	To Office equipment A/c			10,000
	To Outstanding wages A/c (Reduction in the value of office equipment and provision of outstanding wages recorded)			9,500
"	Sriram’s capital A/c	Dr.	5,000
	Raj’s capital A/c	Dr.	2,500
	To Revaluation A/c (Loss on revaluation transferred)			7,500

**Dr. Revaluation Account Cr.**
Particulars	Rs.	Particulars	Rs.	Rs.
To Office equipment A/c	10,000	By Stock A/c		5,000
To Outstanding wages A/c	9,500	By Investment A/c		7,000
		By Loss on revaluation transferred to
		Sriram’s capital A/c (2/3)	5,000
		Raj’s capital A/c (1/3)	2,500	7,500
	19,500			19,500

Generic 2

6 x 2 = 12

Revaluation account will be credited

10.

A person may join as a new partner in an existing partnership firm. This is called admission of a partner.

11.

Calculation of sacrificing ratio
Sacrificing ratio = Old share – New share
Vasu = \(\frac { 3 }{ 5 } -\frac { 3 }{ 8 } =\frac { 24-15 }{ 40 } =\frac { 9 }{ 40 } \)
Devi = \(\frac { 2 }{ 5 } -\frac { 3 }{ 8 } =\frac { 16-15 }{ 40 } =\frac { 1 }{ 40 } \)
Therefore, sacrificing ratio is 9:1

**Journal entry**
Particulars		Debit Rs.	Credit Rs.
Bank A/c	Dr.	3,000
To Vasu’s current A/c (9/10)			2,700
To Devi’s current A/c (1/10) (Cash brought for goodwill credited to old partners’ capital account in sacrificing ratio)			300

12.

Computation of sacrificing ratio and new profit sharing ratio:
Since share sacrificed, proportion of share sacrificed and new profit sharing ratio are not given, it is assumed that the existing partners sacrifice in their old profit sharing ratio, that is, 2:1. Sacrificing ratio of Vimal and Athi is 2:1
Let the total share be 1
Jeyam’s share = \(\frac { 1 }{ 4 } \)
Remaining share = \(1-\frac { 1 }{ 4 } =\frac { 4-1 }{ 4 } \)
= \(\frac { 3 }{ 4 } \)
New share of old partners = Remaining share × Old share
Vimal = \(\frac { 3 }{ 4 } \times \frac { 2 }{ 3 } =\frac { 6 }{ 12 } \)
Athi = \(\frac { 3 }{ 4 } \times \frac { 1 }{ 3 } =\frac { 3 }{ 12 } \)
Share of new partner Jeyam = \(\frac { 1 }{ 4 } \)
In order to equalise the denominator, multiply and divide by 3
Jeyam’s share = \(\frac { 1 }{ 4 } \times \frac { 3 }{ 3 } =\frac { 3 }{ 12 } \)
New profit sharing ratio of Vimal, Athi and Jeyam = \(\frac { 6 }{ 12 } :\frac { 3 }{ 12 } :\frac { 3 }{ 12 } \) that is, 2 : 1 : 1.

13.

Computation of sacrificing ratio and new profit sharing ratio
Old share = 3:2 that is, Suresh \(\frac { 3 }{ 5 } \) and Dinesh \(\frac{2}{5}\) \(Suresh\)
Share sacrificed = Old share x Proportion of share sacrificed
Suresh = \(\frac { 3 }{ 5 } \times \frac { 1 }{ 5 } =\frac { 3 }{ 25 } \)
Dinesh = \(\frac { 2 }{ 5 } \times \frac { 2 }{ 5 } =\frac { 4 }{ 25 } \)
Sacrificing ratio of Suresh and Dinesh is \(\frac { 3 }{ 25 } \) and \(\frac { 4 }{ 25 } \) that is, 3:4
New share = Old share - Share sacrificed
Suresh = \(\frac { 3 }{ 5 } -\frac { 3 }{ 25 } =\frac { 15-3 }{ 25 } =\frac { 12 }{ 25 } \)
Dinesh = \(\frac { 2 }{ 5 } -\frac { 4 }{ 25 } =\frac { 10-4 }{ 25 } =\frac { 6 }{ 25 } \)
Share of new partner = Sum of shares sacrificed by Suresh and Dinesh
Ramesh = \(\frac { 3 }{ 25 } +\frac { 4 }{ 25 } =\frac { 3+4 }{ 25 } =\frac { 7 }{ 25 } \)
New profit sharing ratio of Suresh, Dinesh and Ramesh = \(\frac { 12 }{ 25 } :\frac { 6 }{ 25 } :\frac { 7 }{ 25 } \)that is, 12:6:7.

14.

Computation of sacrificing ratio and new profit sharing ratio
Shares sacrificed = \(\frac { 2 }{ 7 } ,\frac { 1 }{ 7 } \)
Sacrificing ratio of Ravi and Kumar is 2:1
Old profit sharing ratio = 7:3 or \(\frac { 7 }{ 10 } :\frac { 3 }{ 10 } \)
New share of old partners = Old share - Share sacrificed
Ravi = \(\frac { 7 }{ 10 } -\frac { 2 }{ 7 } =\frac { 49-20 }{ 70 } =\frac { 29 }{ 70 } \)
Kumar = \(\frac { 3 }{ 10 } -\frac { 1 }{ 7 } =\frac { 21-10 }{ 70 } =\frac { 11 }{ 70 } \)
Share of new partner Christy = \(\frac { 3 }{ 7 } \)
In order to equate the denominator of Christy’s share, multiply and divide by 10
= \(\frac { 3 }{ 7 } \times \frac { 10 }{ 10 } =\frac { 30 }{ 70 } \)
New profit sharing ratio of Ravi, Kumar and Christy = \(\frac { 29 }{ 70 } :\frac { 11 }{ 70 } :\frac { 30 }{ 70 } \) = 29:11:30