Reconstitution of a Partnership Firm - Admission of a Partner

Download CBSE Class 12th Standard CBSE Accountancy question papers, sample papers, important questions, and previous year solved papers in PDF format. Get free study materials, NCERT solutions, and exam preparation resources for Class 12th Standard CBSE Accountancy

Questions:

Generic 3

8 x 3 = 24

Mohan and Sohan are partners in a firm sharing profits and losses in the ratio of 3:2. They admit Rohan as a new partner for 1/5th share. The goodwill of the firm is valued at RS.30,000. Goodwill already appears in the books at RS.15,000. Rohan brings in 60% of his share of goodwill and RS.1,20,000 as his capital in cash. The amount of goodwill brought in cash is withdrawn by the concerned partners to the extent of 30% of what is credited to them. The profits for the first year of new partnership amounted to RS.60,000.
Give necessary journal entries to adjust goodwill and to distribute profits.

A and B were partners in a firm sharing profits in the ratio of 11:4. C was admitted as a new partner for 1/5th share in the profits on 31st March, 2015. The balance sheet of A and B on 31st March, 2015 was as follows
Balance Sheet
as at 31st March, 2015

Liabilities		Amt (RS)	Assets		Amt (RS)
Creditors		15,000	Bank		17,000
Bills Payable		30,000	Stock		29,000
Employees Provident Fund		20,000	Debtors	30,000
Workmen Compensation Fund		1,60,000	(-) Provision for Doubtful Debts	(1,000)	29,000
Capital A/cs			Plant		3,00,000
A	20,00,000		Land		10,00,000
B	5,50,000	25,50,000	Buildings		14,00,000
		27,75,000			27,75,000

It was agreed that
(i) C bring in capital to the extent of 1/5th of the total capital of the new firm and RS.1,50,000 for his share of goodwill, half of which was withdrawn by A and B.
(ii) Buildings and plant were to be depreciated by RS.20%.
(iii) Provision for bad debts was to be increased by RS.200.
(iv) Claim on account of workmen compensation is RS.10,000.
Prepare revaluation account, partners' capital accounts and balance sheet of a new firm.

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

Liabilities		Amt (RS)	Assets	Amt (RS)
Provision for Doubtful Debts		40,000	Cash	1,00,000
Workmen's Compensation Fund		56,000	Debtors	8,00,000
Outstanding Expenses		30,000	Stock	2,00,000
Creditors		3,00,000	Machinery	3,86,000
Capital A/cs			Profit and loss A/c	40,000
A	5,00,000
B	6,00,000	11,00,000
		15,26,000		15,26,000

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.

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

Why should general reserve be distributed among old partners at the time of admission of a partner?

A and B were partners in a firm sharing profits in the ratio of 3:2. They admitted C and D as new partners. The new profit sharing ratio will be 2:2:1:1. C and D brought Rs.2,75,000 each for their respective capitals and also necessary amount of premium for goodwill in cash. Goodwill was valued at Rs.2,40,000 for the firm. Calculate sacrificing ratio of A and B and pass necessary journal entries for the above transactions in the books of the firm.

Hari, Ravi and kavi were partners in a firm sharing profits in the ratio of 3:2:1. They admitted Guru as a new partner for 1/7th share in the profits. The new profit sharing ratio will be 2:2:2:1 respectively. Guru brought Rs.3,00,000 for his capital and Rs.45,000 for his 1/7th share of goodwill. Showing your workings clearly,pass necessary journal entries in the books of the firm for the above mentioned transactions.

A and B are partners in a firm sharing profits in the ratio of 5:3. They admit C into the partnership for 3/10th share in profits which he takes 2/10th from A and 1/10th from A and 1/10th from B. C brings in Rs.3,000 as premium in cash out of his share of Rs.7,800. Goodwill account does not appear in the books of A and B. Give the necessary journal entries in the books of the new firm.

Generic 8

4 x 8 = 32

Har, Ravi and Kavi were partners in a firm sharing profits in the ratio of 3:2:1. They admitted Guru as a new partner for 1/7th share in the profits. The new profit sharing ratio will be 2:2:2:1 respectively. Guru brought in RS.3,00,000 for his capital and RS.45,000 for his 1/7th share of goodwill. Showing your working clearly, pass necessary journal entries in the books of the firm for the above mentioned transactions.

10.

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.

11.

A and B are partners sharing profits and losses in the ratio of 3:2 On 31st March, 2014 their Balance Sheet was as follows:

Liabilities	Rs	Assets	Rs
Capital Accounts		Goodwill	5,000
A	60,000	Plant and Machinery	65,000
B	50,000	Furniture	15,000
General Reserves	10,000	Investments	20,000
Sundry Creditors	50,000	Stock	20,000
		Sundry Debtors	30,000
		Cash in Hand	15,000
	1,70,000		1,70,000

C was admitted on the following terms:

(i)C is bring capital Rs.40,000 and Goodwill Rs.15,000

(ii)Partners agreed to share the future profits in the ratio of 5:3:2.

(iii)Investments will be appreciated by 20% and furniture depreciated by 10%

(iv)One customer who owed the firm Rs.2,000 becomes insolvent and nothing could be realised from him.

(v)Creditors will be written back by Rs.2,000

(vi)Outstanding bills for repair Rs.1,000 will be provided for

(vii)Interest accured on investments Rs.2,000

(viii)Capital of the partners shall be in proportion to their profit sharing ratio. For this adjustments to be made through cash.

Prepare Revaluation account Partners' capital Account and the Balance sheet of the firm after C's admission.

12.

Given below is the Balance Sheet of Krishna and Suresh who are partners in a firm sharing profits in the ratio of 3:2.

Liabilities		Rs	Assets	Rs
Creditors		15,000	Plant & Machinery	30,000
Reserves		5,000	Patents	5,000
Capital Accounts			Furniture	3,000
Krishna	30,000		Stock	16,000
Suresh	20,000	50,000	Debtors	15,000
			Cash	1,000
		70,000		70,000

On that date Mohan is admitted as a partner for 1/5th share on the following terms:

(a)He is to contribute Rs.14,000 as his share of capital which includes his share of premium for goodwill.

(b)Goodwill is valued at 2 years' purchase the average profits of the last 4years, which were Rs.10,000; Rs.9,000, Rs.8,000 and Rs.13,000 respectively.

(c)Plant to be written down to Rs.25,000 and patents written up by Rs.8,000.

(d)Unrecorded investment Rs.7,000

Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet of the new firm.

Generic 6

3 x 6 = 18

13.

Prepare memorandum revaluatThe balance sheet of Uday, Veer and Suraj, who share profits in the ratio of their capitals is given below
Balance Sheet
as at 1st January, 2016

Liabilities		Amt (RS)	Assets	Amt (RS)
Capital A/cs			Goodwill	10,000
Uday	1,00,000		Land and Building	1,00,000
Veer	50,000		Plant and Machinery	50,000
Suraj	50,000	2,00,000	Furniture and Fixtures	20,000
Reserve Fund		20,000	Stock	20,000
Overdraft Rent		10,000	Debtors	30,000
Creditors for Goods		20,000	Loan to Uday	10,000
			Prepaid Salary	10,000
		2,50,000		2,50,000

On the date of balance sheet, Pratap is admitted for 1/6th share and the following adjustments are agreed upon
(i) There is an unrecorded liability for bill discounted amounting to RS.5,000.
(ii) Land and buildings have been revalued at RS.1,10,000.
(iii) It is decided to depreciate plant and machinery by 5% and furniture and by 15%.
(iv) Stock is found overvalued by RS.2,000.
(v) Prepaid salary is to be written-off.
Prepare memorandum revaluation account to give effect to the above adjustments.

14.

Samiksha and Sameer are partners sharing profits in the ratio of 2:1. On 1st April, 2015, they admitted Saurabh as a partner for 1/6th share which he acquired in the ratio of 2:3 from them. On 1st April, 2016, they admitted Vishal as a partner for 1/4th share which he acquired equally from all the partners.
Calculate
(i) New profit sharing ratio after Saurabh's admission.
(ii) New profit sharing ratio after Vishal's admission.

15.

A and B share profits in the ratio of 5:3. The new partner gets 1/5th of A's share and 1/3rd of B's share Calculate new profit sharing ratio and sacrificing ratio.

Visit QB365-SLMS - https://www.qb365.in/slms/

Answers Key:

Generic 3

8 x 3 = 24

Sacrificing ratio=3:2 and new ratio=12:8:5

Loss on revaluation=RS.3,40,200; capital of A (after adjustments)=RS.19,15,520; Capital of B (after adjustments)=RS.5,19,280; C's share of capital=RS.6,08,700; Balance sheet total=RS.31,18,500

Loss on revaluation=RS.22,000; Capitals: A=RS.4,82,000, B=RS.6,12,000, C=RS.4,00,000;

Revaluation account will be credited.

General reserve is created out of past profits. Therefore, it belongs to old partners and should be credited to their accounts at the time of admission of a partner.

(i) Dr.Bank A/c Rs.6,30,000; Cr C's Capital A/c Rs.2,75,000, D's Capital A/c by Rs.2,75,000 and Premium for Goodwill Rs.80,000.
(ii) Dr.premium for Goodwill A/c Rs.80,000; Cr.A/c Rs.64,000 and B's Capital A/c Rs.16,000.
[Hint: Sacrificing Ratio 4:1,C's and D's share of goodwill =Rs.40,000(i.e.,Rs.2,40,000x1/6)each]

(i) Dr.Cash A/c Rs.3,45,000; Cr.Guru's Capital A/c Rs.3,00,000 and Premium for goodwill A/c Rs.45,000.
(ii) Dr.Premium for Goodwill A/c Rs.45,000 and kavi's Capital A/c Rs.37,500; Cr.Hari's Capital A/c Rs.67,500 and Ravi's Capital Rs.15,000.
[Hint: (i)Hari's sacrifice 9/42, Ravi's sacrifice 2/42, kavi's gain 5/42 (ii)Kavi's share of goodwill: Rs.45,000X7/1X5/42=Rs.37,500]

(i) Dr.Cash A/c, Cr.Premium for Goodwill A/c by Rs.3,000
(ii )Dr.Premium for Goodwill A/c Rs.3,000 and C's Current A/c Rs.4,800; Cr.A's Capital A/c Rs.5,200 and B's Capital A/c Rs.2,600(in sacrificing ratio 2:1)

Generic 8

4 x 8 = 32

JOURNAL

Particulars	Amt (Dr)	Amt (Cr)
Bank A/c Dr	3,45,000
To Guru's Capital A/c		3,00,000
To Premium for Goodwill A/c		45,000
(Being the capital and premium brought in by Guru)
Premium for Goodwill A/c Dr	45,000
Kavi's Capital A/c Dr	37,500
To Har's Capital A/c (Rs.\(82,500\times 9/11\))		67,500
To Ravi's Capital A/c (RS.\(82,500\times 2/11\))		15,000
(Being the premium adjusted through sacrificing partners' capital accounts)

10.

(i)Calculation of Sacrificing share:
Singh's sacrifice=\({1\over3}of{3\over8}={1\over8};\) Gupta's sacrifice=\({1\over4}of{2\over8}={1\over16}\); Lal's sacrifice=\({1\over5}of{3\over8}={3\over40}\)
(ii)Calculation of new profit sharing ratio:
New share =old Share-Sacrificed share
Singh's new share=\({3\over8}-{1\over8}={3-1\over8}={2\over8};\) Gupta's new share=\({2\over8}-{1\over16}={4-1\over16}={3\over16};\)
Lal's new share=\({3\over8}-{3\over40}={15-3\over40}={12\over40};\)
Jain's new share=\({1\over8}+{1\over16}+{3\over40}={10+5+6\over80}={21\over80}\)
Thus,New Ratio is \({2\over8}:{3\over16}:{12\over40}:{21\over80}={20:15:24:21:\over80}=20:15:24:21\)

11.

Profit on Revaluation Rs.3,500. For existing Goodwill written off : Dr. A's Capital Rs.3,000 and B's Capital Rs.2000; Cr.Goodwill Rs.5,000; For Cash Goodwill: Dr.Premium for Goodwill A/c Rs.15,000; Cr. A's Capital and B's Capital Rs.7,500 each in their sacrificing ratio 1:1; Balance of capital A/cs after adjustments : A Rs.72,600, B Rs.60,900 and C Rs.40,000; Capital rearranged: A Rs.1,00,000, B Rs.60,000 and C Rs.40,000; Cash brought in by A Rs.27,400; Cash withdrawn by B Rs.900; Cash Balance Rs.96,500; Balance Sheet Total Rs.2,49,000.

[Hints: As total capital of new firm based on C's share =Rs.40,000X\(10\over2\)=Rs.20,000, so A's Capital=Rs.2,00,000x\(5\over10\)=Rs.1,00,000 and B's Capital Rs.2,00,000x\(3\over10\)=Rs.60,000]

12.

Profit on Revaluation Rs.10,000; Balance of capital A/cs: Krishna Rs.41,000, Suresh Rs.27,600 and Mohan Rs.10,000; Cash Balance Rs.15,000 and Balance Sheet Total Rs.94,000.

[Hint: 0.7 Mohan's share of goodwill=40,000/4X2x1/5=Rs.4,000]

Generic 6

3 x 6 = 18

13.

Profit sharing ratio=2:1:1; Loss on revaluation=RS.12,500 will first be debited to old partners in the ratio of 2:1:1 and then profit on restoring to original values will be credited to all partners in the ratio of 10:5:5:4.

14.

(i) profit sharing ratio after Saurabh's admission
=18:7:5
(ii) profit sharing ratio after Vishal's admission
=93:27:15:45

15.

New profit sharing ratio=2:1:1 ;
Sacrificing ratio=1:1