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12th Standard Accountancy Unit 5 Admission of a Partner Book Back Questions | QB365

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12th Standard Accountancy Unit 5 Admission of a Partner Book Back Questions

Published on: 03/09/2019

Admission of a Partner

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Questions:

Generic 2

5 x 2 = 10

Aparna and Priya are partners who share profits and losses in the ratio of 3:2. Brindha joins the firm for 1/5 share of profits and brings in cash for her share of goodwill of Rs.10,000. Pass necessary journal entry for adjusting goodwill on the assumption that the fluctuating capital method is followed and the partners withdraw the entire amount of their share of goodwill.

Anjali and Nithya are partners of a firm sharing profits and losses in the ratio of 5:3. They admit Pramila on 1.1.2018. On that date, their balance sheet showed accumulated loss of Rs. 40,000 on the asset side of the balance sheet. Give the journal entry to transfer the accumulated loss on admission.

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.

Ramesh and Raju are partners sharing profits in the ratio of 2:1. They admit Ranjan into partnership with 1/4 share of profit. Ranjan acquired the share from old partners in the ratio of 3:2. Calculate the new profit sharing ratio and sacrificing ratio.

Mala and Vimala were partners sharing profits and losses in the ratio of 3:2. On 31.3.2017, Varshini was admitted as a partner. On the date of admission, the book of the firm showed a reserve fund of Rs. 50,000. Pass the journal entry to distribute the reserve fund.

Generic 3

1 x 3 = 3

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

2 x 5 = 10

Ameer and Raja are partners sharing profits in the ratio of 3:2. Their balance sheet is shown as under on 31.12.2018.

Liabilities	Rs.	Rs.	Assets	Rs.
Capital accounts:			Machinery	60,000
Ameer	80,000		Furniture	40,000
Raja	70,000	1,50,000	Debtors	30,000
Reserve fund		15,000	Stock	10,000
Creditors		35,000	Prepaid insurance	40,000
			Cash at bank	20,000
		2,00,000		2,00,000

Rohit is admitted as a new partner who introduces a capital of Rs. 30,000 for his 1/5 share in future profits. He brings Rs. 10,000 for his share of goodwill.
Following revaluations are made:
(i) Stock is to be appreciated to Rs. 14,000
(ii) Furniture is to be depreciated by 5%
(iii) Machinery is to be revalued at Rs. 80,000
Prepare the necessary ledger accounts and the balance sheet after the 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.

Multiple Choice Question

5 x 1 = 5

Balaji and Kamalesh are partners sharing profits and losses in the ratio of 2:1. They admit Yogesh into partnership. The new profit sharing ratio between Balaji, Kamalesh and Yogesh is agreed to 3:1:1. Find the sacrificing ratio between Balaji and Kamalesh.

(a)

1:3

(b)

3:1

(c)

2:1

(d)

1:2

10.

James and Kamal are sharing profits and losses in the ratio of 5:3. They admit Sunil as a partner giving him 1/5 share of profits. Find out the sacrificing ratio.

(a)

1:3

(b)

3:1

(c)

5:3

(d)

3:5

11.

Select the odd one out

(a)

Revaluation profit

(b)

Accumulated loss

(c)

Goodwill brought by new partner

(d)

Investment fluctuation fund

12.

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

13.

At the time of admission, the goodwill brought by the new partner may be credited to the capital accounts of

(a)

all the partners

(b)

the old partners

(c)

the new partner

(d)

the sacrificing partne

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Answers Key:

Generic 2

5 x 2 = 10

Adjustment for goodwill
As the sacrifice made by the existing partners is not mentioned, it is assumed that they sacrifice in their old profit sharing ratio 3 : 2.

Journal Entry
Particulars	Debit Rs.	Credit Rs.
Bank A/c	10,000
To Aaparna's capital A/c (3/5)		6,000
To Priya's Capital A/c (2/5)		4,000
(Cash brought for goodwill credited to Aparna's and Priya in sacrificing ratio)
Apama's capital A/c Dr	6,000
Priya's Capital A/c Dr	4,000
To Bank A/c		10,000
(Amount withdrawn by the partners)

Journal Entry
Date	Particulars	Debit Rs.	Credit Rs.
2018 January 1	Anjali's capital A/c (40,000\(\times\)5/8) Dr	25,000
	Nithya's capital A/c (40,000 \(\times\) 3/8) Dr	15,000
	To Profit and loss A/c		40,000
	(Accumulated loss transferred to old partner's capital account in the old profit sharing ratio)

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

Computation of sacrificing ratio and new profit sharing ratio
Ranjan’s share = \(\frac { 1 }{ 4 } \)
Old ratio=2:1 that is, \(\frac { 2 }{ 3 } :\frac { 1 }{ 3 } \)
Proportion of share sacrificed = 3:2 that is, \(\frac { 3 }{ 5 } :\frac { 2 }{ 5 } \)
Share sacrificed = New partner’s share × Proportion of share sacrificed
Ramesh = \(\frac { 1 }{ 4 } \times \frac { 3 }{ 5 } =\frac { 3 }{ 20 } \)
Raju = \(\frac { 1 }{ 4 } \times \frac { 2 }{ 5 } =\frac { 2 }{ 20 } \)
Sacrificing ratio of Ramesh and Raju is \(\frac { 3 }{ 20 } \) and \(\frac { 2 }{ 20 } \), that is, 3:2
New share of old partner = Old share - Share sacrificed
Ramesh = \(\frac { 2 }{ 3 } -\frac { 3 }{ 20 } =\frac { 40-9 }{ 60 } =\frac { 31 }{ 60 } \)
Raju = \(\frac { 1 }{ 3 } -\frac { 2 }{ 20 } =\frac { 20-6 }{ 60 } =\frac { 14 }{ 60 } \)
Share of new partner Ranjan = \(\frac { 1 }{ 4 } \)
In order to equate the denominator, multiply and divide Ranjan’s share by 15
= \(\frac { 1 }{ 4 } \times \frac { 15 }{ 15 } =\frac { 15 }{ 60 } \)
Thus, the new profit sharing ratio = \(\frac { 31 }{ 60 } :\frac { 14 }{ 60 } :\frac { 15 }{ 60 } \) = 31 : 14 : 15

**Journal entry**
Date	Particulars	Debit Rs.	Credit Rs.
2017	Reserve fund A/c Dr.	50,000
March 31	To Mala’s capital A/c (50,000 \(\times\) 3/5)		30,000
	To Vimala’s capital A/c (50,000 \(\times\) 2/5) (Reserve fund transferred to old partners’ capital account in the old profit sharing ratio)		20,000

Generic 3

1 x 3 = 3

**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

2 x 5 = 10

**Dr. Revaluation Account Cr.**
Particulars	Rs.	Rs.	Particulars	Rs.
To Furniture A/c		2,000	By Stock A/c	4,000
To Profit on revaluation transferred to			By Machinery A/c	20,000
Ameer’s capital A/c (3/5)	13,200
Raja’s capital A/c (2/5)	8,800	22,000
		24,000		24,000

**Dr. Capital Account Cr.**
Particulars	Ameer Rs.	Raja Rs.	Rohit Rs.	Particulars	Ameer Rs.	Raja Rs.	Rohit Rs.
To Balance c/d	1,08,200	88,800	30,000	By Balance b/d	80,000	70,000	-
				By Bank A/c	-	-	30,000
				By Reserve fund A/c	9,000	6,000	-
				By Revaluation A/c	13,200	8,800	-
				By Bank A/c* (share of goodwill	6,000	4,000	-
	1,08,200	88,800	30,000		1,08,200	88,800	30,000
				By Balance b/d	1,08,200	88,800	30,000

Since the sacrificing ratio is not given and the new partner’s share is given, it is assumed that the old profit sharing ratio (3:2) is the sacrificing ratio and the new partner’s share of goodwill is distributed to the old partners accordingly.

**Dr. Cash at bank Account Cr.**
Particulars	Rs.	Particulars	Rs.
To Balance b/d	20,000	By Balance	60,000
To Rohit’s capital A/c	30,000
To Ameer’s capital A/c	6,000
To Raja’s capital A/c	4,000
	60,000		60,000

Balance Sheet as on 1st January 2019
Liabilities	Rs.	Rs.	Assets	Rs.	Rs.
Capital accounts:			Machinery	60,000
Ameer	1,08,200		Add: Appreciation	20,000	80,000
Raja	88,800		Furniture	40,000
Rohit	30,000	2,27,000	Less: Depreciation	2,000	38,000
		35,000	Debtors		30,000
			Stock	10,000
			Add: Appreciation	4,000	14,000
			Prepaid insurance		40,000
			Cash at bank		60,000
		2,62,000			2,62,000

**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