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Admission of Partner (Isc) PDF

This document provides textbook solutions for Class 12 Commerce Accountancy Chapter 3 Admission Of A Partner from the book Double Entry Book Keeping Ts Grewal 2017. The solutions include journal entries for admitting a new partner into the firm by revaluing assets and distributing the profit on revaluation and goodwill among the partners. Workings are also shown for calculating the revaluation profit, distribution of profit among partners, and recalculating partners' capital amounts after admission of the new partner.

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100% found this document useful (1 vote)

1K views183 pages

Admission of Partner (Isc) PDF

Uploaded by

Riddhima Das

We take content rights seriously. If you suspect this is your content, claim it here.

Available Formats

Download as PDF, TXT or read online on Scribd

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7/4/2020 Double Entry Book Keeping Ts Grewal 2017 for Class 12 Commerce Accountancy Chapter 3 - Admission Of A Partner

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Page No 3.100: 
Share

ANSWER:

Journal
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Jou a

Debit Credit
Date Particulars L.F. Amount Amount
(Rs) (Rs)

C’s Capital A/c Dr. 6,900

To A’s Capital A/c 4,140
To B’s Capital A/c 2,760
(Revaluation adjusted)

Balance Sheet

Amount Amount
Liabilities Assets
Rs Rs

Creditors 30,000 Freehold 2,00,000

Premises
Bills Payable 20,000 Plant 40,000

Capital Furniture 20,000

X 2,10,140 Office 25,000

Equipment

Y 1,06,760 Bank 70,000

(10,000+50,000+10,000)
Z 43,100 3,60,000 Stock 30,000

Debtors 25,000

4,10,000 4,10,000

Working Notes:
WN 1: Calculation of Profit on Revaluation:

Amount 
Particulars Share
Rs

Freehold Premises 40,000

Furniture 5,000
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Office Equipment 2,500

Less:
Provision for Doubtful Debts 5,000

Stock 3,000

Plant 5,000

Profit on Revaluation 34,500

WN 2:
1
C's Share in Revaluation = 34,500 × = Rs 6,900 and it should be credited to A& B in the ratio of 3
5

3
A's Share = 6,900 × = 4, 140
5
2
B's Share = 6,900 × = 2, 760
5

WN 3: Calculation of Distribution of Goodwill

3
A's Share = 10, 000 × = 6, 000
5

2
B's Share = 10, 000 × = 4, 000
5

WN 4: Calculation of Capital of Partners’

A's Capital = 2, 00, 000 + 4, 140 + 6, 000 = 2, 10, 140

B's Capital = 1, 00, 000 + 2, 760 + 4, 000 = 1, 06, 760

C's Capital = 50, 000 − 6, 900 = 43, 100

Page No 3.100:

ANSWER:

Books of ….
Journal
Debit Credit
Date Particulars L.F. Amount Amount
Rs Rs
General Reserve A/c Dr. 1,60,000
To A’s Capital A/c 96,000
To B’s Capital A/c 64,000
Share
(General reserve distributed between old partners in
their old ratio)

A’s Capital A/c Dr. 72,000

B’s Capital A/c Dr. 48,000
To Profit and Loss A/c 1,20,000
(Debit balance of profit and loss distributed between
old partners in their old ratio)

Page No 3.100:

ANSWER:

Journal

Debit Credit
Date Particulars L.F. Amount Amount
(Rs) (Rs)

(a) General Reserve A/c Dr. 36,000

Contingency Reserve A/c Dr. 6,000
Profit and Loss A/c Dr. 18,000

To X’s Capital A/c 30,000

To Y’s Capital A/c 18,000
To Z’s Capital A/c 12,000
(Reserves and profits are distributed among
the partners in their old ratio)

X’s Capital A/c Dr. 12,000

Y’s Capital A/c Dr. 7,200
Z’s Capital A/c Dr. 4,800
To Advertisement Suspense A/c 24,000
(Balance of advertisement suspense is
debited to partners’ capital accounts in old
ratio)

Share

(b) General Reserve A/c Dr. 84,000

To A’s Capital A/c 48,000
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To B’s Capital A/c 36,000

(Reserve distributed between the partners in
their old ratio)

A’s Capital A/c Dr. 4,800

B’s Capital A/c Dr. 3,600
To Profit & Loss A/c 8,400
(Balance of profit and loss debited to
partners’ capital accounts in old ratio)

(c) Workmen Compensation Reserve A/c Dr. 72,000

To X’s Capital A/c 36,000

To Y’s Capital A/c 36,000
(Balance of WCR distributed between the
partners in their old ratio, i.e. 1:1)

(d) Workmen Compensation Reserve A/c Dr. 72,000

To Workmen Compensation Claim A/c 48,000
To X’s Capital A/c 12,000
To Y’s Capital A/c 12,000
(Claim against WCF is created and excess
balance is distributed between the partners
in their old ratio, i.e. 1:1)

(e) Investment Fluctuation Reserve A/c Dr. 24,000

To Investments A/c 10,000

To X’s Capital A/c 7,000

To Y’s Capital A/c 7,000

(Balance of IFR transferred to Investments

for the decrease and excess balance is
distributed between the partners in their old 
ratio, i.e. 1:1) Share

(f) General Reserve A/c Dr. 4,800

To Investment Fluctuation Reserve A/c 960

To X’s Capital A/c 1,920

To Y’s Capital A/c 1,920

(20% of general reserve transferred to IFR

and balance is distributed between the
partners in their old ratio, i.e. 1:1)

(g)

Journal

Debit Credit
Date Particulars L.F. Amount Amount
(Rs) (Rs)

C’s Current A/c Dr. 36,000

D’s Current A/c Dr. 18,000

To A’s Current A/c 54,000

(Gaining partners’ compensated to
Sacrificing Partner)

Working Notes:
WN1: Calculation of Adjusted Balance

Particulars Amount

General Reserve 1,50,000

Contingency Reserve 60,000

P&L A/c (Cr.) 90,000

Advertisement Suspense A/c (Dr.) (1,20,000)

Adjusted Balance 1,80,000


WN2: Calculation of Sacrifice/(Gain) Share
Sacrifice = Old Ratio ˗ New Ratio

6 3 3
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6 3 3
A = − =
10 10 10

3 3
B = − = 0
10 10

1 3 2
C = − = − (Gain)
10 10 10

2
Amount of gain to C = 1, 80, 000 × = 36, 000
10
1
Amount of gain to D = 1, 80, 000 × = 18, 000
10

Page No 3.101:

ANSWER:

Journal

Debit Credit
Date Particulars L.F. Amount Amount
(Rs) (Rs)

Case Workmen Compensation Reserve A/c Dr. 12,000

To X’s Capital A/c 6,000

To Y’s Capital A/c 3,600

To Z’s Capital A/c 2,400

(Workmen Compensation Reserve
distributed)

Case Workmen Compensation Reserve A/c Dr. 12,000

2
To Workmen Compensation Claim A/c 1,500
To X’s Capital A/c 5,250
To Y’s Capital A/c 3,150
Share
To Z’s Capital A/c 2,100
(Workmen Compensation Reserve
distributed)

Case Workmen Compensation Reserve A/c Dr. 12,000

3
Revaluation A/c Dr. 10,000
To Workmen Compensation Claim A/c 22,000
(Workmen Compensation Reserve
adjusted towards the claim)

X’s Capital A/c Dr. 5,000

Y’s Capital A/c Dr. 3,000
Z’s Capital A/c Dr. 2,000
To Revaluation A/c 10,000
(Partner contributed for workmen
compensation claim deficiency)

Page No 3.101:

ANSWER:

Journal

Debit Credit
Date Particulars L.F. Amount Amount
(Rs) (Rs)

Case Investment Fluctuation Reserve A/c Dr. 10,000

1
To X’s Capital A/c 5,000
To Y’s Capital A/c 3,000
To Z’s Capital A/c 2,000

Share
(Investment Fluctuation Reserve

distributed)

Case Investment Fluctuation Reserve A/c Dr. 10,000

2
To X’s Capital A/c 5,000
To Y’s Capital A/c 3,000

To Z’s Capital A/c 2,000

(Investment Fluctuation Reserve
distributed)

Case Investment Fluctuation Reserve A/c Dr. 10,000

3
To Investment A/c 5,000
To X’s Capital A/c 2,500
To Y’s Capital A/c 1,500
To Z’s Capital A/c 1,000
(Excess Investment Fluctuation Reserve
distributed)

Case Investment Fluctuation Reserve A/c Dr. 10,000

4
Revaluation A/c Dr. 5,000
To Investment A/c 15,000
(Investment Fluctuation Reserve adjusted
towards decrease in value of investment)

X’s Capital A/c Dr. 2,500

Y’s Capital A/c Dr. 1,500

Z’s Capital A/c Dr. 1,000

To Revaluation A/c 5,000

( Partner contributed for Investment
fluctuation reserve deficiency)


Share
Case Investment Fluctuation Reserve A/c Dr. 10,000

5
To X’s Capital A/c 5,000
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To Y’s Capital A/c 3,000

To Z’s Capital A/c 2,000

(Investment Fluctuation Reserve

distributed)

Investment A/c Dr. 10,000

To Revaluation A/c 10,000

(Surplus in value of Investment
transferred to Revaluation a/c)

Revaluation A/c Dr. 10,000

To X’s Capital A/c 5,000

To Y’s Capital A/c 3,000

To Z’s Capital A/c 2,000

(Investment Fluctuation Reserve Surplus
transferred to Partners Capital A/c)

Page No 3.101:

ANSWER:

Journal

Debit Credit
Date Particulars L.F. Amount Amount
(Rs) (Rs)

C’s Current A/c Dr. 6,000 

Share
D’s Current A/c Dr. 3,000
To A’s Current A/c 9,000
(Adjustment entry made for change in ratio)
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Working Notes:
WN1: Calculation of Sacrifice or Gain:

A:B:C = 6 :3:1 (Old Ratio)

A:B:C:D = 3:3:3:1 (New Ratio)

6 3 3
A = − = (S acrif ice)
10 10 10

3 3
B = − = 0
10 10

1 3 2
C = − = − (Gain)
10 10 10

1 1
D = 0 − = − (Gain)
10 10

Amount to be adjusted = General Reserve + Contingency Reserve + Profit and Loss− Advertisem

=30,000+5,000+15,000− 20,000 = Rs 30,000

3
A's share = 30,000 × = Rs 9,000
10

2
C's share = 30,000 × = Rs 6,000
10
1
D's share = 30,000 × = Rs 3,000
10

Page No 3.102:

ANSWER:

Journal

Debit Credit
Date Particulars L.F. Amount Amount
(Rs) (Rs)

R’s Capital A/c Dr. 66,000

S’s Capital A/c Dr. 33,000
To P’s Capital A/c 99,000
Share
(Adjustment entry made for change in ratio)

Working Notes:
WN1: Calculation of Sacrifice or Gain:

P:Q:R=6:3:1 (Old Ratio)

P:Q:R:S=3:3:3:1 (New Ratio)

6 3 3
P = − = (Sacrifice)
10 10 10
3 3
Q = − =0
10 10

1 3 2
R = − = − (Gain)
10 10 10

1 1
S = 0 − = − (Gain)
10 10

Amount to be adjusted = General Reserve + Contingency Reserve + P& L − Advertisement Suspe

+ Workmen Compensation Reserve + Investment Fluctuation Reserve

=2,40,000+40,000+1,20,000− 1,00,000+20,000+10,000 = Rs 3,30,000

3
P's share=3,30,000× = Rs 99,000
10

2
R's share=3,30,000× = Rs 66,000
10

1
S's share=3,30,000× = Rs 33,000
10

Amount
Particulars
(Rs)
Workmen Compensation Reserve 40,000
less: Claim on Workmen Compensation Reserve 20,000
Amount to be adjusted 20,000

Investment Fluctuation Reserve 20,000

less: Decrease in the Value of Investment 10,000
Amount to be adjusted 10,000

Page No 3.102:

ANSWER:

Revaluation Account
Dr. Cr.
Amount Amount 
Particulars Particulars
Rs Rs Share

Stock A/c 30,000 Provision for Doubtful Debts A/c 24,000

Patents A/c 74 000 Loss transferred to:
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Patents A/c 74,000 Loss transferred to:
Claim for Damages A/c 20,000 A’s Capital A/c 60,000
B’s Capital A/c 40,000 1,00,000
1,24,000 1,24,000

Partners’ Capital Accounts

Dr.
Particulars A B C Particulars A

Revaluation A/c 60,000 40,000 Balance b/d 4,00,000 3,5

Balance c/d 5,08,000 4,22,000 3,00,000 Bank A/c
Premium for Goodwill A/c 60,000 4
General Reserve A/c 1,08,000 7

5,68,000 4,62,000 3,00,000 5,68,000 4,6

Balance Sheet
as on April 01, 2017 after C’s admission
Amount Amount
Liabilities Assets
Rs Rs

Sundry Creditors 3,20,000 Debtors 4,80,000

Claim for Damages 20,000 Less: Provision for 24,000 4,56,000
Doubtful Debts
Stock (3,00,000 – 30,000) 2,70,000
Capital A/c: Building 2,04,000
A 5,08,000 Cash (2,40,000 + 4,00,000) 6,40,000
B 4,22,000
C 3,00,000 12,30,000
15,70,000 15,70,000


Share
Working Notes

Goodwill of the Firm = 4, 00, 000

1
C's Share = 4, 00, 000 × = Rs 1, 00, 000
4

Page No 3.102:

ANSWER:

Revaluation Account

Dr.

Amount Amount
Particulars Particulars
Rs Rs

Provision for 800 Land (1, 00,000 10,

Doubtful Debts × 10%)
(20,000 × 4%)

Less: Old 500 300

Provision

Stock (30,000 × 5%) 1,500

Profit transferred to

V Capital 5,740

N Capital 2,460

10,000 10,

Partners’ Capital Accounts

Dr. Cr.

Particulars V N P Particulars V N P
Share
Balance b/d 1,50,000 50,000

Revaluation 5,740 2,460

General 7,000 3,000

Reserve

P’s Loan 80,000

Balance c/d 1,90,740 67,460 80,000 Premium 28,000 12,000

for
Goodwill

1,90,740 67,460 80,000 1,90,740 67,460 80,000

Balance Sheet

as on April 01, 2017 after P’s admission

Amount Amount
Liabilities Assets
Rs Rs

Creditors 10,000 Cash (15,500 + 55,500

40,000)

Bills Payable 15,000 Debtors 20,000

Capital A/cs: Bills 50,000

Receivables

V 1,90,740 Stock (30,000 – 28,500

1,500)

N 67,460 Building 1,00,000

P 80,000 3,38,200 Land (1,00,000 1,10,000

+ 10,000)

Provision for Doubtful Debts 800

3,64,000 3,64,000

Working Notes

WN1 Share

Cash Account

Dr. Cr.
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Amount Amount
Particulars Particulars
Rs Rs

Balance b/d 15,500

Premium for 40,000

Goodwill

Balance c/d 55,500

55,500 55,500

WN2

Distribution of Premium for Goodwill

Page No 3.103:

ANSWER:

Revaluation Account
Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs
Building 62,500 Stock 2,50,000
Machinery 25,000 Unrecorded Asset 3,00,000
Outstanding Salary 75,000
Profit:
X 2,32,500
Y 1,55,000 3,87,500
5,50,000 
5,50,000
Share

Partners’ Capital Accounts

Dr
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Dr.
Particulars X Y Z Particulars X Y Z

Goodwill 75,000 50,000 Balance b/d 20,00,000 10,00,000

X Capital A/c 75,000 Revaluation 2,32,500 1,55,000
Y Capital A/c 50,000 Z’s Capital A/c 75,000 50,000
Balance c/d 25,32,500 13,55,000 11,25,000 Premium for 1,80,000 1,20,000
Goodwill
Z’s Current A/c 1,20,000 80,000
Bank 12,50
26,07,500 14,05,000 12,50,000 26,07,500 14,05,000 12,50

Cash at Bank Account

Dr. Cr.

Particulars Amount Particulars Amount

Rs Rs

Balance b/d 14,37,500 Debtors 62,500

Z’s capital A/c 12,50,000 Balance c/d 29,25,000
Premium for goodwill A/c 3,00,000

29,87,500 29,87,500

Balance Sheet
Amount Amount
Liabilities Assets
Rs Rs

General Reserve 3,75,000 Cash 62,500

Bills Payable 2,50,000 Bank 29,25,000

Creditors 6,25,000 Debtors (1,25,000 + 62,500) 1,87,500
Capital Stock 10,00,000
X 25,32,500 Building 12,50,000
Y 13,55,000 Less: Depreciation 62,500 11,87,500
Share
Z 11,25,000 50,12,500 Machines 5,00,000
Outstanding Salary 75,000 Less: Depreciation 25,000 4,75,000

Unrecorded Assets 3,00,000

Z’s Current A/c 2,00,000

63,37,500 63,37,500

For Adjusting General Reserve

Journal

Debit Credit
Date Particulars L.F. Amount Amount
(Rs) (Rs)

Z’s Capital A/c Dr. 1,25,000

To X’s Capital A/c 75,000
To Y’s Capital A/c 50,000
(Adjustment made for General Reserve)

For Calcula ng amount to be adjusted for General Reserve

Z's share of General Reserve = 13 × 3, 75, 000 = Rs 1, 25, 000

Amount to be credited to
X Capital A/c = 35 × 1, 25, 000 = Rs 75, 000

Y Capital A/c = 25 × 1, 25, 000 = Rs 50, 000

Page No 3.103:

ANSWER:

Revaluation Account
Dr. Cr.
Amount Amount
Particulars Particulars 
Rs Rs Share
Provision for Doubtful Debts A/c 1,500 Land and Building A/c 3,000
Profit transferred to: Stock A/c 2,500
X’s Capital A/c 2,400
Y’s Capital A/c 1 600 4 000
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Y s Capital A/c 1,600 4,000
5,500 5,500

Partners’ Capital Accounts

Dr.
Particulars X Y Z Particulars
Advertisement Expenditure A/c 3,000 2,000 Balance b/d
Balance c/d 40,200 26,800 15,000 Bank A/c
Premium for Goodwill A/c
Revaluation A/c
General Reserve A/c
Workmen Compensation Reserv
43,200 28,800 15,000

Balance Sheet
as on April 01, 2017 after Z’s admission
Amount Amount
Liabilities Assets
Rs Rs
Sundry Creditors 1,10,000 Debtors 22,000
Less: Provision for
Employees’ Provident Fund 8,000 2,500 19,500
Doubtful Debts
Workmen Compensation Land and Building (68,000 + 3,000)
12,000 71,000
Reserve
Capital A/cs: Plant and Machinery 12,000
X 40,200 Stock (11,000 + 2,500) 13,500
Y 26,800 Bank (71,000 + 10,000 + 15,000) 96,000
Z 15,000 82,000
2,12,000 2,12,000


Share

Page No 3.104:

ANSWER:

Revaluation Account
Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs
Provision for Doubtful Debts A/c 200 Accrued Commission A/c 1,500
Outstanding Rent A/c 5,000 Loss transferred to:
Investments A/c 2,000 X’s Capital A/c 3,420
Y’s Capital A/c 2,280 5,700
7,200 7,200

Partners’ Capital Accounts

Dr. Cr.
Particulars X Y Z Particulars X Y Z

Balance c/d 1,54,000 1,36,000 1,20,000 Balance b/d 1,54,000 1,36,000

Cash A/c 1,20,000
1,54,000 1,36,000 1,20,000 1,54,000 1,36,000 1,20,000

Partners’ Current Accounts

Dr. Cr.
Particulars X Y Z Particulars X Y Z
Cash A/c 4,200 1,800 Balance b/d 10,000 2,000
Revaluation A/c 3,420 2,280 Premium for Goodwill A/c 8,400 3,600
Goodwill A/c 6,000 4,000 General Reserve A/c 7,200 4,800
Investments A/c 6,000
Balance c/d 5,980 2,320
25,600 10,400 25,600 10,400

Share

Balance Sheet
as on April 01 2017 after Z’s admission
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7/4/2020 Double Entry Book Keeping Ts Grewal 2017 for Class 12 Commerce Accountancy Chapter 3 - Admission Of A Partner
as on April 01, 2017 after Z s admission
Amount Amount
Liabilities Assets
Rs Rs

Sundry Creditors 15,000 Accrued Commission 1,500

Outstanding Rent 5,000 Debtors 20,000
Less: Provision for
Capital A/c: 1,000 19,000
Doubtful Debts
X 1,54,000 Patents 14,800
Y 1,36,000 Cash in hand 1,51,000
Z 1,20,000 4,10,000 Cash at Bank 1,80,000
Current A/c: Machinery 72,000
X 5,980
Y 2,320 8,300
4,38,300 4,38,300

Working Notes

WN 1: Calculation of Sacrificing Ratio

Old ratio = 3 : 2

New profit sharing ratio = 4 : 3 : 2

Sacrificing ratio= Old ratio – New ratio

3 4 7
Sacrifice made by X = − =
5 9 45

2 3 3
Sacrifice made by Y = − =
5 9 45

Sacrificing ratio = 7 : 3

WN 2: Calculation of Goodwill

Goodwill = Average Profits for Last 3 Years’ × Number of Years’ Purchase

Total Profit = 25,000 + 26000 + 30,000 = Rs 81,000

Total Profit
Average Profits for 3 years =
3 
Share
81,000
Average Profit = = 27, 000
3

Goodwill = 27,000 × 2 = Rs 54,000

2
Z's share of goodwill = 54, 000 × = 12, 000
9

Cash Account
Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs
Balance b/d 25,000 X’s Capital A/c 4,200
Z’s Capital A/c 1,20,000 Y’s Capital A/c 1,800
Premium for Goodwill A/c 12,000 Balance c/d 1,51,000

1,57,000 1,57,000

Page No 3.104:

ANSWER:

Books of ….
Journal
Debit Credit
Date Particulars L.F. Amount Amount
Rs Rs
Bank A/c Dr. 40,000
To Z’s Capital A/c 40,000
(Capital amount brought in by new partners)

Z’s Current A/c Dr. 3,000

To X’s Capital A/c 1,800
To Y’s Capital A/c 1,200
(Z’s Current Account debited for amount of
goodwill not brought by him and credited to
old partners in their sacrificing ratio)


Revaluation A/c Dr. 2,000 Share
Provision for Doubtful Debts A/c 4,000
To Debtors 6,000
(Bad Debts written-off)

Revaluation A/c Dr. 2,000

To Creditors A/c 2,000
(Creditors are to be paid 2,000 more)

Revaluation A/c Dr. 2,000

To Claim for Damages A/c 2,000
(Created claim for damages)

Outstanding Rent A/c Dr. 1,800

To Revaluation A/c 1,800
(Outstanding rent reduced by 1,800)

X’s Capital A/c Dr. 2,520

Y’s Capital A/c Dr. 1,680
To Revaluation A/c 4,200
(Revaluation loss distributed among old
partners in their old ratio)

Partners’ Capital Accounts

Dr. Cr.
Particulars X Y Z Particulars X Y Z
Balance b/d 50,000 60,000
Revaluation A/c 2,520 1,680 Bank A/c 40,000
Profit and Loss A/c 2,400 1,600 Z’s Current A/c 1,800 1,200
Workmen
Balance c/d 48,440 58,960 40,000 Compensation 1,560 1,040
Reserve A/c
53,360 62,240 40,000 53,360 62,240 40,000

Balance Sheet
as on April 01, 2017 after Z’s admission
Amount Amount
Liabilities Assets
Rs Rs

Outstanding Rent 11,200 Debtors 80,000 Share
Less: Provision for
Sundry Creditors 22,000 6,000 74,000
Doubtful Debts
Workmen Compensation Reserve 3,000 Stock 20,000
Claim for Damages 2 000
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Claim for Damages 2,000

Capital A/cs: Machinery 38,600

X 48,440 Cash (10,000 + 40,000) 50,000
Y 58,960 Z’s Current A/c 3,000
Z 40,000 1,47,400
1,85,600 1,85,600

Working Notes: Calculation of Goodwill

Total Profit
Average profit for 3 years =
3

Total Profit = 10,000 + 20,000 + 30,000 = Rs 60,000

60,000
Average profit for 3 years = = 20, 000
3

Goodwill = 20,000 × 1.5 – 12,000 = 18,000

1
Z's share of goodwill = 18, 000 × = 3, 000
6

Note: Opening Balance Sheet implies Balance Sheet as on April 01, 2016.

Page No 3.105:

ANSWER:

Revaluation Account
Dr. Cr.

Amount Amount
Particulars Particulars
Rs Rs


Stock 30,000 Provision for d/d 24,000Share
Patents 74,000 Loss transferred to:
Outstanding Claim 20,000 X 60,000

Y 40,000 1,00,000

1,24,000 1,24,000

Partners’ Capital Accounts

Dr.

Particulars X Y Z Particulars X Y

X Capital 21,600 Balance b/d 4,00,000 3,50,000

A/c
Y Capital 14,400 Z’s Capital 21,600 14,400
A/c A/c
Revaluation 60,000 40,000 Premium 60,000 40,000
A/c for
Goodwill
Balance c/d 4,21,600 3,64,400 2,64,000 Cash 3

4,81,600 4,04,400 3,00,000 4,81,600 4,04,400 3

Balance Sheet

Amount Amount
Liabilities Assets
Rs Rs

General Reserve 1,80,000 Cash (2,40,000 + 1,00,000 + 3,00,000) 6,40,000

Bills Payable 50,000 Stock 2,70,000
Creditors 2,70,000 Debtors 4,80,000
Capital Less: Prov. for DD 24,000 4,56,000
X 4,21,600 Building 2,04,000

Y 3,64,400 Share

Z 2,64,000 10,50,000
Outstanding Claim 20,000

15,70,000 15,70,000

Working Note:
1. Closing Stock Balance = Opening balance - Value of Stock reduced (10%)
3,00,000 ─ 3, 00, 000 − ( 100
10
× 3, 00, 000) = 2, 70, 000

2. For Calculating amount to be adjusted for General Reserve

Z's share of General Reserve = 1 × 1, 80, 000 = Rs 36, 000
5
Amount to be credited to

X Capital A/c = 3
5
× 36, 000 = Rs 21, 600

Y Capital A/c = 2 × 36, 000 = Rs 14, 400

For Adjusting General Reserve

Journal

Debit Credit
Date Particulars L.F. Amount Amount

(Rs) (Rs)

Z’s Capital A/c Dr. 36,000

To X’s Capital A/c 21,600
To Y’s Capital A/c 14,400
(Adjustment made for General Reserve)

Page No 3.105:

ANSWER:

Books of …. 
Share
Journal

Date Particulars L.F. Debit Credit

Amount Amount
Rs Rs
https://www.meritnation.com/icse-class-12-commerce/accountancy/double-entry-book-keeping-ts-grewal-2017/admission-of-a-partner/textbook-sol… 26/183
7/4/2020 Double Entry Book Keeping Ts Grewal 2017 for Class 12 Commerce Accountancy Chapter 3 - Admission Of A Partner
Rs Rs
Cash A/c Dr. 22,500
To T’s Capital A/c 20,000
To Premium for Goodwill A/c 2,500
(Capital and goodwill brought in by T)

T’s Current A/c Dr. 7,500

Premium for Goodwill A/c Dr. 2,500
To X’s Capital A/c 5,000
To Y’s Capital A/c 5,000
(Goodwill amount distributed between sacrificing
partners in their sacrificing ratio)

Stock A/c Dr. 10,000

To Revaluation A/c 10,000
(Increase in value of stock)

Revaluation A/c Dr. 2,600

To Furniture A/c 2,600
(Depreciated furniture @ 10%)

Land and Building A/c Dr. 20,000

To Revaluation A/c 20,000
(Value of land and building appreciated by 20%)

Revaluation A/c Dr. 2,200

To Provision for Doubtful Debts A/c 2,200
(Provision created against debtors)

Outstanding Liabilities A/c Dr. 2,000

To X’s Capital A/c 2,000
(Reimbursed X for the payment made by hi, for
the outstanding liabilities)

Creditors A/c Dr. 5,000

To Revaluation A/c 5,000
(Creditors reduced by 5,000) 
Share

Revaluation A/c Dr. 30,200

To X’s Capital A/c 12,080
To Y’s Capital A/c 12 080
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To Y s Capital A/c 12,080
To Z’s Capital A/c 6,040
(Revaluation profit distributed among old
partners in their old ratio)

77,480 75,480 31,240 20,000 77,480 75,48

Balance Sheet
as on April 01, 2016 after T’s admission
Amount
Liabilities Assets
Rs

Sundry Creditors (51,400 – 5,000) 46,400 Land and Building (1,00,000 + 20,000)
Outstanding Liabilities 4,000 Furniture (26,000 – 2,600)
Stock (47,000 + 10,000)
Capital A/c: Sundry Debtors 22,000
Less: Provision for Doubtful
X 77,480 2,200
Debts
Y 75,480 Cash
Z 31,240 T’s Current A/c
T 20,000 2,04,200 
Share
2,54,600

Cash Account
Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs
Balance b/d 4,400 Balance c/d 26,900
T’s Capital A/c 20,000
Premium for goodwill A/c 2,500
26,900 26,900

Working Notes:

Calculation of Sacrificing Ratio

Old ratio = 2 : 2 : 1

New profit sharing ratio = 5 : 5 : 3 : 2

Sacrificing ratio = Old ratio − New ratio

2 5 1
Sacrifice made by X = − =
5 15 15

2 5 1
Sacrifice made by Y = − =
5 15 15

1 3
Sacrifice made by Z = − = 0
5 15

Sacrificing Ratio = 1 : 1

Page No 3.106:

ANSWER:

Revaluation Account
Dr.
Amount A
Particulars Particulars 
Rs Share

Provision for Doubtful Debts A/c (5% of

4,250 Advertisement Expense A/c
85 000)
https://www.meritnation.com/icse-class-12-commerce/accountancy/double-entry-book-keeping-ts-grewal-2017/admission-of-a-partner/textbook-sol… 29/183
7/4/2020 Double Entry Book Keeping Ts Grewal 2017 for Class 12 Commerce Accountancy Chapter 3 - Admission Of A Partner
85,000)
A’s Capital A/c (Revaluation Expenses) 5,250 B’s Capital A/c (Personal expenses)
Loss transferred to:
A’s Capital A/c 750
B’s Capital A/c 500
C’s Capital A/c 250
9,500

Partners’ Capital Accounts

Dr.
Particulars A B C D Particulars A

Revaluation A/c 5,000 Balance b/d 1,50,000

Revaluation A/c (Loss) 750 500 250 Bank A/c
A’s Capital A/c 18,854 Revaluation A/c 5,250
B’s Capital A/c 12,569 Creditors A/c
Balance c/d 6,285 C’s Capital A/c 18,854
Balance c/d 1,73,354 1,57,069 1,06,035 87,292
1,74,104 1,62,569 1,06,285 1,25,000 1,74,104

Balance Sheet
as on April 01, 2016 after D’s admission
Amount Amount
Liabilities Assets
Rs Rs
Sundry Creditors 50,000 Building 1,25,000
Bills Payable 25,000 Plant and Machinery 1,00,000
Furniture 75,000
Stock 50,000
Capital A/cs: Debtors 75,000
Add: Bill dishonoured 10,000
Less: Provision for
A 1,73,354 4,250 80,750
Doubtful Debts

B 1,57,069 Bills Receivable 50,000
Share
C 1,06,035 Advertisement Expenses 3,000
D 87,292 5,23,750 Bank 1,15,000
5,98,750 5,98,750

Bank Account
Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs
Debtors A/c (Bill
Balance b/d 25,000 10,000
Dishonoured)
D’s Capital A/c 1,00,000 Balance c/d 1,15,000
1,25,000 1,25,000

Working Notes:

WN1 Calculation of Hidden Goodwill

Capitalised Value of Firm = Incoming Partner 's Capital × Reciprocal of Incoming Partn

6
= 1, 25, 000 × = Rs 7, 50, 000
1

Net Worth of Firm = Adjusted Capital of Partners + Accumulated Reserves – Accumulated Losses
= 1,55,400 + 1,44,500 + 99,750 + 1,25,000 = 5,23,750

Hidden Goodwill = Capital Value of Firm – Net Worth of Firm

= 7,50,000 – 5,23,750 = Rs 2,26,250

1
'D's share of Goodwill = Hidden Goodwill × D's Share = 2, 26, 250 × = R
6

This share will be shared by the old partners in their sacrificing ratio i.e. 3 : 2 : 1

The following Journal entry will be passed:

D’s Capital A/c Dr. 37,708
To A’s Capital A/c 18,854
To B’s Capital A/c 12,569
To C’s Capital A/c 6,285
(Adjustment for goodwill made)
Note: The balances of Partners' Capital Accounts as worked out in the above solution are
different from the answers as per the book. As per the textbook answer, the working of hidden

Share
goodwill has not been considered.

Page No 3.107:

ANSWER:

Revaluation Account
Cr.
Amount Amount
Particulars Particulars
Rs Rs
Bad Debts A/c 2,000 Stock A/c 2,000
Provision for Doubtful Debts A/c 2,000 Creditors A/c 800
Loss transferred to:
X’s Capital A/c 720
Y’s Capital A/c 480 1,200
4,000 4,000

Partners’ Capital Accounts

Dr.
Particulars X Y Z Particulars X Y
Revaluation A/c 720 480 Balance b/d 50,000 40,000
Balance c/d 58,280 45,520 30,000 Bank A/c 3
Premium for Goodwill A/c 3,000 2,000

Reserve A/c 6,000 4,000

59,000 46,000 30,000 59,000 46,000 3

Balance Sheet
as on April 01, 2012 after Z’s admission
Amount Amount
Liabilities Assets
Rs Rs
Employees’ Provident Fund 5,000 Debtors 22,000

Less: Provision for Share
Sundry Creditors 19,200 2,000
Doubtful Debts
Less: Bad Debts 2,000 18,000
Capital A/cs: Stock (18,000 + 2,000) 20,000

X 58,280 Machinery 30,000

Y 45,520 Building 50,000
Z 30,000 1,33,800 Cash at Bank 40,000
1,58,000 1,58,000

Working Notes: Calculation of Increase in Stock

Value of Stock (90%) = Rs 18, 000

100
Value of Stock (100%) = Rs 20, 000 (18, 000 × )
90

∴ Increase in stock = Rs 2, 000

Cash at Bank Account

Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs
Balance b/d 5,000 Balance c/d 40,000
Z’s Capital A/c 30,000
Premium for Goodwill a/c 5,000
40,000 40,000

Page No 3.107:

ANSWER:

Revaluation Account
Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs

Provision for Doubtful Debt 8,500 Advertisement Expenses 6,000

(1,70,000×5%)
A’s Capital A/c 10,100 B’s Capital A/c 10,000
Furniture 40,000 Loss : 
A 21,300 Share
B 14,200
C 7,100 42,600
58,600 58,600

Partners’ Capital Accounts

Dr.

Particulars A B C D Particulars A

Balance b/d 3,00,000

Revaluation 21,300 14,200 7,100 Creditors

Revaluation 10,000 Bank

Balance c/d 3,83,300 3,38,800 2,24,400 2,50,000 Premium 94,500

for Goodwill

Revaluation 10,100

4,04,600 3,63,000 2,31,500 2,50,000 4,04,600

Balance Sheet
Amount Amount
Liabilities Assets
(Rs) (Rs)
Bills Payable 50,000 Bank 4,19,000
Creditors 1,00,000 Stock 1,00,000
Capital Debtors 1,70,000
A 3,83,300 Less: Prov. for DD 8,500 1,61,500
B 3,38,800 Building 2,50,000
C 2,24,400 Machinery 2,00,000
D 2,50,000 11,96,500 Furniture 1,10,000
Bills Receivable 1,00,000
Advertisement Expenses 6,000
13,46,500 13,46,500

Working Notes:

WN 1: Closing Bank Balance

Bank = 50,000 + 2,00,000 + 1,89,000−20,000 = Rs 4,19,000


Share

Page No 3.108:

ANSWER:

Revaluation Account

Dr. Cr.

Amount Amount
Particulars Particulars
Rs Rs

Prov. for D. Debts 600 Accrued Income 4,500

Outstanding Rent 15,000 Loss transferred to

Investments 6,000 X’s Current A/c 10,260

Y’s Current A/c 6,840

21,600 21,600

Partners’ Capital Accounts

Dr. Cr.

Particulars X Y Z Particulars X Y Z

Balance b/d 1,80,000 90,000

Balance c/d 1,80,000 90,000 60,000 Bank 60,000

1,80,000 90,000 60,000 1,80,000 90,000 60,000

Partners’ Current Accounts

Dr. Cr.

Particulars X Y Z Particulars X Y Z

Revaluation 10,260 6,840 Balance b/d 30,000 6,000 

Share
Goodwill 18,000 12,000 General Reserve 21,600 14,400
Bank 12,600 5,400 Premium for 25,200 10,800
Goodwill

Investments 18,000
Balance c/d 17,940 6,960

76,800 31,200 76,800 31,200

Balance Sheet

Amount Amount
Liabilities Assets
Rs Rs

Capital A/cs: Patents 44,400

X 1,80,000 Fixed Assets 2,16,000

Y 90,000 Accrued Income 4,500

Z 60,000 3,30,000 Cash at Bank (15,000 + 96,000 – 18,000) 93,000

Outstanding Rent 15,000 Debtors 60,000

Current A/cs: Less: 5% Reserve for D. Debts 3,000 57,000

X 17,940

Y 6,960 24,900

Creditors 45,000

4,14,900 4,14,900

Journal

Debit Credit

Particulars L.F. Amount Amount

Rs Rs

Bank A/c Dr. 96,000 

Share
To Z’s Capital 60,000

To Premium for Goodwill 36,000

(Z brought Capital and share of goodwill)

Premium for Goodwill A/c Dr. 36,000

To X’s Current A/c 25,200

To Y’s Current A/c 10,800

(Premium for Goodwill transferred to partners

current account in sacrificing ratio i.e. 7:3)

X's Current A/c Dr. 12,600

Y's Current A/c Dr. 5,400
To BankA/c 18,000
(Half of goodwill withdrawn by partners)

Working Notes:

WN1 Calculation of Z's Share of Premium for Goodwill

90,000+78,000+75,000
Average Profits = = Rs 81, 000
3

Firm 's Goodwil = 81, 000 × 2 = Rs 1, 62, 000

2
Z's share = 1, 62, 000 × = Rs 36, 000
9

Rs 36, 000 will be distributed between X and Y in sacrificing ratio.

WN2 Calculation of Sacrificing Ratio

Sacrificing Ratio = Old Ratio − New Ratio

3 4 7
X's sacrifice = − =
5 9 45

2 3 3
Y's sacrifice = − =
5 9 45

Sacrificing Ratio = 7 : 3

WN3 Calculation of Share of Premium of Goodwill

7
X's share = 36, 000 × = Rs 25, 200
10

3
Y's share = 36, 000 × = Rs 10, 800
10


WN4 Distribution of Loss on Revaluation Share

3
X's share = 17, 100 × = Rs 10, 260
5

2
Y's share = 17, 100 × = Rs 6, 840
5

Page No 3.108:

ANSWER:

Revaluation Account
Dr. Cr.

Amount Amount
Particulars Particulars
Rs Rs

Provision for Doubtful Debts 1,000 Machinery 3,000

Outstanding salary 2,000 Stock 2,000

Profit transferred to:
M 1,250
N 750 2,000

5,000 5,000

Partners’ Capital Accounts

Dr. Cr.

Particulars M N R Particulars M N R

Goodwill 3,125 1,875 Balance b/d 12,000 10,000

A/c
Bank A/c 1,500 500 Revaluation 1,250 750
A/c

Balance c/d 11,625 9,375 8,000 Premium for 3,000 1,000

Goodwill
Bank 8,000

16,250 9,375 8,000 16,250 9,375 Share
8,000

Balance Sheet

Amount Amount
Liabilities Assets
Rs Rs

General Reserve 6,000 Cash 1,300

Bills Payable 2,000 Stock 10,000
Creditors 4,000 Bank 10,500
M’s Current A/c 1,125 Machinery 15,000

N’s Current A/c 375 Debtors 7,200

Capital Less: 1,000 6,200

Provision
for
DD
M 11,625 R’s Current A/c 1,500

N 9,375
R 8,000 29,000
Outstanding Salary 2,000

44,500 44,500

Working Notes:
WN 1: Calculation of Sacrificing Ratio
5 7 3
M = − =
8 16 16

3 5 1
N = − =
8 16 16

M:N= 3:1

WN 2: Treatment of General Reserve

4
R's share in General Reserve = 6,000 × = Rs 1,500
16

Rs 1,500 is to be shared by M and N in the ratio of 3:1

Journal

Debit Credit
Share
Date Particulars L.F. Amount Amount
(Rs) (Rs)

R’s Current A/c Dr. 1,500

To M’s Current A/c 1,125
To N’s Current A/c 375
(Adjustment entry made for General
Reserve)

Page No 3.109:

ANSWER:

Revaluation Account

Dr. Cr.

Amount Amount
Particulars Particulars
Rs Rs

Land and Building 20,000 Sundry Creditors 1,200

Stock 3,200 Loss transferred to

Provision for Doubtful Debts 1,000 A Capital 13,800

B Capital 9,200

24,200 24,200

Partners’ Capital Accounts 

Share
Dr. Cr.

Particulars A B C Particulars A B C

A’s Capital 4,000 Balance b/d 86,000 64,000

B’s Capital 4,000 General 12,000 8,000

Reserve

Revaluation 13,800 9,200 Cash 50,000

Goodwill 6,000 4,000 C’s Capital 4,000 4,000

Balance c/d 82,200 62,800 42,000

1,02,000 76,000 50,000 1,02,000 76,000 50,000

Balance Sheet

as on April 01, 2017 (after C’s admission)

Amount Amount
Liabilities Assets
Rs Rs

Capital A/cs: Land and Building (60,000 –

40,000
20,000)

A 82,200 Plant and Machinery 70,000

B 62,800 Sundry Debtors 20,000

C 42,000 Less: Provision for

1,87,000 1,000 19,000
D. Debts

Stock (36,000 –
32,800
3,200)

Sundry Creditors (31,200 – 1,200) 30,000 Cash at Bank 4,000

Cash in Hand (1,200 + 50,000) 51,200

2,17,000 2,17,000


Share
WN1: Calculation of C’s share of Goodwill

Debit Credit

Particulars Amount Amount

Rs Rs

C’s Capital A/c Dr. 8,000

To A’s Capital A/c 4,000

To B’s Capital A/c 4,000

(C’s share of goodwill charge from his capital)

WN2: Distribution of General Reserve (in old ratio)

WN3: Writing-off of Goodwill

Note: The answer given in book is different as the amount of goodwill has been adjusted through
Partner's Capital Account in our solution.

Page No 3.109:

ANSWER: 
Share

Journal

Particulars L.F. Debit Credit

Amount Amount

Rs Rs

Reserve Fund A/c Dr. 4,000

To A’s Capital A/c 3,000

To B’s Capital A/c 1,000

(Reserve Fund distributed)

Revaluation A/c Dr. 4,050

To Stock A/c 2,000

To Fixtures A/c 100

To Provision for Doubtful Debts A/c 950

To Outstanding Claim for Damages A/c 1,000

(Decrease in assets, increase in liability and provision

for doubtful debts created)

Land and Building A/c Dr. 5,000

Sundry Creditors A/c Dr. 650

To Revaluation A/c 5,650

(Decrease in creditors and increase in land and

building transferred to Revaluation Account)

Revaluation A/c Dr. 1,600

To A’s Capital A/c 1,200

To B’s Capital A/c 400

(Profit on revaluation transferred to A and B’s Capital

Accounts in their old profit sharing ratio)

Share

Bank A/c Dr. 15,000

To C’s Capital A/c 10,000

To Premium for Goodwill A/c 5,000

(C brought capital and share of goodwill)

Premium for Goodwill A/c Dr. 5,000

To A’s Capital A/c 3,750

To B’s Capital A/c 1,250

(Premium for Goodwill distributed between A and B

in sacrificing ratio i.e. 3:1)

A’s Capital A/c Dr. 1,875

B’s Capital A/c Dr. 625

To Bank A/c 2,500

(Half of the Premium for Goodwill withdrawn)

Revaluation Account

Dr. Cr.

Amount Amount
Particulars Particulars
Rs Rs

Stock 2,000 Land and Building 5,000

Fixtures 100 Sundry Creditors 650

Provision for D. Debts (19,000 × 5%) 950

Outstanding Claim for Damages 1,000

Profit transferred to

A Capital 1,200 
Share
B Capital 400

5,650 5,650

Partners’ Capital Accounts

Dr. Cr.

Particulars A B C Particulars A B C

Bank 1,875 625 Balance b/d 30,000 16,000

(withdrawn
of
Goodwill)

Bank 10,000

Revaluation 1,200 400

(Profit)

Reserve 3,000 1,000

Fund

Balance c/d 36,075 18,025 10,000 Premium for 3,750 1,250

Goodwill

37,950 18,650 10,000 37,950 18,650 10,000

Balance Sheet

as on April 01, 2017 after C’s admission

Amount Amount
Liabilities Assets
Rs Rs

Capital A/cs: Land and Building 30,000

A 36,075 Fixtures 900

B 18,025 Stock 18,000

Share
C 10,000 64,100

Creditors (41,500 – 650) 40,850 Debtors 16,000

Bills Receivable 3,000

Outstanding Claim for Damages 1,000 19,000

Less: 5% Prov. for D. 950 18,050

Debts

Bank 39,000

1,05,950 1,05,950

Page No 3.110:

ANSWER:

Revaluation Account

Dr. Cr.

Amount Amount
Particulars Particulars
Rs Rs

Stock 750 Building 5,000

Provision for D. 500

Debts

Less: Old 400 100 

Provision Share

Furniture 500

Profit on Revaluation
transferred to

Rajesh Capital 2,190

Ravi Capital 1,460

5,000 5,000

Partners’ Capital Accounts

Dr.

Particulars Rajesh Ravi Raman Particulars Rajesh Ravi

Balance 29,000 15,0

b/d

Revaluation 2,190 1,4

Balance 31,190 16,460 16,000 Cash

c/d

(before
and just
went of

Goodwill)

31,190 16,460 16,000 31,190 16,4

Rajesh’s 1,635 Balance 31,190 16,4

Capital c/d

Raman’s 1,635 Raman’s 1,635 1,6

Capital Capital

Balance 32,825 18,095 12,730

c/d

32,825 18,095 16,000 32,825 18,0


Share

B l Sh t
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Balance Sheet

as on March 31, 2017 after Raman’s admission

Amount
Liabilities Assets
Rs

Creditors 38,500 Cash (2,000 + 16,000)

Outstanding Rent 4,000 Stock (15,000 – 750)

Capital A/cs: Prepaid Insurance

Rajesh 32,825 Debtors 9,400

Ravi 18,095 Less: 500

Provision for
D. Debts

Raman 12,730 63,730 Machinery

Building (35,000 + 5,000)

Furniture (5,000 – 500)

1,06,150

Working Notes-

WN1

Calculation of Sacrificing Ratio

Sacrificing Ratio = Old Ratio − New Ratio


Share

WN2

Calculation of Goodwill

Actual Capital of all Partners before adjustment of goodwill = Rajesh’s Capital + Ravi’s Capital +
Raman’s Capital

= 31,190 + 16,460 + 16,000

= Rs 63,650

Capitalised value on the basis of Raman’s share

Raman’s share of Goodwill

WN3

Adjustment of Raman’s share of goodwill

Rajesh and Ravi each Capital Accounts will be credited by

Journal

Debit Credit

Particulars L.F. Amount Amount

Rs Rs


Raman’s Dr. 3,270 Share
Capital
A/c

To Rajesh’s Capital A/c 1,635

To Ravi’s Capital A/c 1,635

(Raman’s share of
goodwill adjusted)

WN4

Distribution of Profit on Revaluation (in old ratio)

Note: The answer given in book is different as the adjustment of goodwill has been made
through Capital Account of the Partner and not through Current Accounts.

Page No 3.111:

ANSWER:

Revaluation Account

Dr.

Amount Am
Particulars Particulars
Rs

Fixed Assets:

Furniture 95,000 × 10%

Profit transferred Business 2,05,000 × 10%

to Premises

A Capital 15,000 
Share

B Capital 10,000

C Capital 5,000
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30,000

Partners’ Capital Accounts

Dr.

Particulars A B C D Particulars A

A’s Capital 7,500 Balance b/d 1,20,000 1

(Goodwill)

B’s Capital 2,500 Revaluation 15,000

(Goodwill) (Profit)

Cash

Balance c/d 1,65,000 1,40,000 1,15,000 1,20,000 Premium 22,500

for
Goodwill

C’s Capital 7,500

(Goodwill)

1,65,000 1,40,000 1,25,000 1,20,000 1,65,000 1

Balance Sheet

as on April 01, 2017, after D’s admission

Amount Amount
Liabilities Assets
Rs Rs

Share

Capital A/cs: Furniture 1,04,5

(95,000 + 9,500)

A 1 65 000 Business 2 25 5
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A 1,65,000 Business 2,25,5
Premises
(2,05,000+20,500)

B 1,40,000 Stock-in-Trade 40,0

C 1,15,000 Debtors 28,0

D 1,20,000 5,40,000 Cash at Bank 15,0

Sundry Creditors 20,000 Cash in hand 1,54,2

(4,200 +
1,50,000)

Outstanding salaries and wages 7,200

5,67,200 5,67,2

Working Note:

WN1

Calculation of Sacrificing Ratio

Sacrificing Ratio = Old Ratio − New Ratio

WN2

Share
Calculation of C’s gain in goodwill

WN3

Amount of Goodwill to be distributed between A and B (Sacrificing Partners)

WN4

Journal Entries for D’s Capital and distribution of goodwill

Debit Cre

Particulars L.F. Amount Amo

Rs R

Cash A/c Dr. 1,50,000

To D’s Capital A/c 1,2

To Premium for Goodwill A/c 3

(D brought Capital and share of Capital)


Premium for Goodwill Dr. 30,000 Share

C’s Capital A/c Dr. 10,000

To A’s Capital A/c 3

To B’s Capital

(Gain goodwill distributed between A and B in sacrificing ratio i.e.

3:1)

Page No 3.111:

ANSWER:

Revaluation Account
Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs

Provision for Doubtful Debts A/c 950 Land and Building A/c 10,000
Furniture A/c 600
Stock A/c 3,850
Profit transferred to:
A’s Capital A/c 2,760
B’s Capital A/c 1,840 4,600
10,000 10,000

Partners’ Capital Accounts

Dr. Cr.
Particulars A B C Particulars A B C

Balance c/d 38,960 41,240 30,000 Balance b/d 30,200 35,400

Bank A/c 30,000
C’s Current A/c 6,000 4,000 
Share
Revaluation
2,760 1,840
A/c
38,960 41,240 30,000 38,960 41,240 30,000

Balance Sheet
as on March 31, 2017 after C’s admission
Amount Amount
Liabilities Assets
Rs Rs

Creditors 20,800 Debtors 19,000

Less: Provision for
Bills Payable 10,000 950 18,050
Doubtful Debts
Furniture (10,600 – 600) 10,000
Land and Building (40,000 + 10,000) 50,000
Capital A/c: Stock (38,500 – 3,850) 34,650
A 38,960 C’s Current A/c 10,000
B 41,240 Cash 18,300
C 30,000 1,10,200

1,41,000 1,41,000

Cash Account
Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs

Balance B/d 8,300 Bank Loan A/c 20,000

C’s Capital A/c 30,000 Balance c/d 18,300
38,300 38,300


Page No 3.112: Share

ANSWER:

Revaluation Account
Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs

Provision for Doubtful Debts A/c 1,100 Land and Building A/c 10,000
Furniture A/c 1,300 Stock A/c 5,000
Profit transferred to:
John’s Capital A/c 5,040
Bull’s Capital A/c 5,040
Wool’s Capital A/c 2,520 12,600
15,000 15,000

Partners’ Capital Accounts

Dr. Cr
Particulars John Bull Wool Tuna Particulars
John Bull Wool Tuna

Balance
Balance c/d 36,240 35,240 15,120 10,000 24,000 24,000 10,000
b/d
Bank
10,000
A/c

Tuna’s Current
1,000 A/c
1,000
General 5,200
Reserve 5,200
A/c 2,600
Revaluation
5,040 5,040 2,520
A/c
Outstanding
Liabilities1,000
A/c
36,240 35,240 15,120 10,000 36,240 35,240 15,120 10,000

Balance Sheet
as on April 01, 2015 after Tuna’s admission 
Amount Amount Share
Liabilities Assets
Rs Rs

Sundry Creditors 25,700 Debtors 11,000

Outstanding Liabilities 2,000 Less: 1,100 9,900

Provision for
Doubtful
Debts
Land and Building (50,000 +
Capital A/cs: 60,000
10,000)
John 36,240 Furniture (13,000 – 1,300) 11,700
Bull 35,240 Stock (23,500 + 5,000) 28,500
Wool 15,120 Cash 12,200
Tuna 10,000 96,600 Tuna’s Current A/c 2,000
1,24,300 1,24,300

Working Notes

New Profit Sharing ratio = 5 : 5 : 3 : 2

2
Tuna's share of goodwill = 15,000 × = 2, 000
15

Old ratio = 2 : 2 : 1

2 5 1
Sacrifice made by John = - =
5 15 15

2 5 1
Sacrifice made by Bull = - =
5 15 15

1 3
Sacrifice made by Wool = - = 0
5 15

Therefore only John and Bull Sacrifices in ratio of 1 : 1.

Cash Account
Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs

Balance b/d 2,200 Balance c/d 12,200

Tuna’s Capital A/c 10,000
12,200 12,200


Share

Page No 3.112:

ANSWER:

Revaluation Account

Dr.

Amount Amount
Particulars Particulars
Rs Rs

Bad Debts 3,000 A's Capital A/c 3

Provision for 1,200 Loss transferred to

Doubtful Debts

Investment (5,000 – 100 A Capital 2,4

4,900)

B Capital 1,6

4,300 4,3

Partners’ Capital Accounts

Dr.

Particulars A B C Particulars A B

Revaluation 2,400 1,600 Balance 50,000 30,0

b/d

Revaluation 300 Bank

Premium 3,000 2,0

for
Goodwill

Balance 50,300 30,400 20,000

c/d

53,000 32,000 20,000 53,000 Share
32,0

Balance Sheet

as on April 01, 2017 after C’s admission

Amount A
Liabilities Assets
Rs

Capital A/cs: Buildings

A 50,300 Machinery

B 30,400 Stock

C 20,000 1,00,700 Debtors 15,000

Creditors 20,000 Less: Bad 3,000

Debts

12,000

Less: 10% 1,200

Provision for
Doubtful
Debts

Bank

1,20,700

Bank Account

Dr.

Amount Amount
Particulars Particulars
Rs Rs

Balance b/d 5,000


C’s Capital 20,000 Share

Premium for Goodwill 5,000

Investments 4,900 Balance c/d 34,

34,900 34,

Working Notes:

WN1

WN2

Distribution of Premium for Goodwill

WN3

Sale of Investments

Bank A/c Dr. 4,900

Revaluation A/c Dr. 100

To Investment 5,000

WN4

Bad debt Recovered

A's Capital A/c Dr. 300

To Revaluation A/c 300


Share

Page No 3.113:

ANSWER:

Calculation of total capital of the new firm

Total capital of the firm = Capital brought in by New Partner × Reciprocal

5
Total capital of the firm = 1, 05, 000 × = Rs 5, 25, 000
1

Calculation of new capital

5
X = 5, 25, 000 × = 2, 62, 500
10

3
Y = 5, 25, 000 × = 1, 57, 500
10

Calculation of cash to be brought in or to be paid by existing partners

Particulars X Y
New Capitalvipin 2,62,500 1,57,500
Less: Existing Capital 2,40,000 1,80,000
22,500 (22,500)
Net Effect
to be brought in to be withdrawn

Working Notes: Calculation of New Profit Sharing Ratio

Old ratio = 3 : 2

1
Z's Share =
5

3 1 1 5
X's New Share = − × =
5 2 5 10

2 1 1 3
Y = − × =
5 2 5 10

1 2
Z = or
5 10

New Profit Sharing Ratio = 5 : 3 : 2

Page No 3.113:

ANSWER:

Revaluation Account
Dr. Cr.

Particulars Amount Particulars Amount
Share

Rs Rs
Furniture A/c 2,520 Stock A/c 2,400
Investment A/c 2 880 Prepaid Salaries A/c 480
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Investment A/c 2,880 Prepaid Salaries A/c 480
Machinery A/c 3,060 Loss transferred to:
Outstanding Rent A/c 1,080 A’s Capital A/c 1,332
B’s Capital A/c 1,998
C’s Capital A/c 3,330 6,660
9,540 9,540

Partners’ Capital Accounts

Dr.
Particulars A B C D Particulars A
Goodwill A/c 2,400 3,600 6,000 Balance b/d 21,600 2
Revaluation A/c 1,332 1,998 3,330 Bank A/c
Balance c/d 20,028 24,042 27,270 19,200 Premium for Goodwill A/c 480
Profit and Loss A/c 1,680

23,760 29,640 36,600 19,200 23,760 2

Cash A/c 828 Balance b/d 20,028 2

Balance c/d 19,200 28,800 48,000 19,200 Cash A/c
20,002 28,800 48,000 19,200 20,002 2

Balance Sheet
as on April 01, 2017 after D’s admission
Amount Amount
Liabilities Assets
Rs Rs

Creditors 38,400 Cash 57,060

Employees’ Provident Fund 19,200 Bills Receivable 14,400
Outstanding Rent 1,080 Furniture (16,800 – 2,520) 14,280
Stock 28,800
Capital A/cs: Debtors 25,200
A 19,200 Investment (19,200 – 2,880) 16,320 
Share
B 28,800 Machinery (20,400 – 3,060) 17,340
C 48,000 Prepaid Salaries 480
D 19,200 1,15,200

1,73,880 1,73,880

Working Notes

Let the total share be 1

1
D is admitted for th share
6

1 5
Remaining = 1 − =
6 6

Old ratio = 2 : 3 : 5

New profit sharing ratio

5 2 10
A = × =
6 10 60

5 3 15
B = × =
6 10 60

5 5 25
C = × =
6 10 60

1 10
D = or
6 60

NPR = 2 : 3 : 5 : 2

Total capital of the firm = Capital of the incoming partner × Reciprocal of h

6
Total capital of the firm = 19, 200 × = 1, 15, 200
1

New capital :

2
A = 1, 15, 200 × = 19, 200
12

3
B = 1, 15, 200 × = 28, 800
12

5
C = 1, 15, 200 × = 48, 000
12

Calculation of cash to be brought in or to be paid by existing partners

Particulars A B C
New Capital 19,200 28,800 48,000
Less: Existing Capital 20,028 24,042 27,270
(828) 4,758 20,730
Net Effect
to be withdrawn to be brought in to be brought in

Cash Account
Dr. Cr.
Amount Amount
Particulars Particulars 
Rs Rs
Share
Balance b/d 10,800 A’s Capital A/c 828
D’s Capital A/c 19,200 Balance c/d 57,060

Premium for Goodwill A/c 2,400

B’ C it l A/ 4 758
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B’s Capital A/c 4,758
C’s Capital A/c 20,730

57,888 57,888

Page No 3.113:

ANSWER:

Revaluation Account
Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs

Stock A/c 2,000 Land and Building A/c 5,000

Office Furniture A/c 100
Provision for Doubtful Debts A/c 800
Profit transferred to:
A’s Capital A/c 1,575
B’s Capital A/c 525 2,100
5,000 5,000

Current A/c 4,525 Balance b/d 37,575

Balance c/d 42,000 14,000 14,000 Current A/c 4,425
42,000 18,525 14,000 42,000
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, , , ,

Balance Sheet
as on April 01, 2017 after C’s admission
Liabilities Amount Assets Amount

Rs Rs

Sundry Creditors 37,500 Debtors 16,000

Less: Provision for
800 15,200
Doubtful Debts
Land and Building (25,000 + 5,000) 30,000
Capital A/c: Bills Receivable 3,000
A 42,000 Stock (20,000 – 2,000) 18,000
B 14,000 Furniture (1,000 – 100) 900
C 14,000 70,000 Cash at Bank 36,500
Current A/c:
Current A/c: A 4,425
B 4,525 C 4,000 8,425
1,12,025 1,12,025

Working Notes

1
C is admitted for share
5

Let the total share = 1

1 4
Remaining share = 1 − =
5 5

Old ratio = 3 : 1

New profit sharing ratio

4 3 12
A = × =
5 4 20

4 1 4
B = × =
5 4 20

C =
1
or
4
Share
5 20

New profit sharing ratio = 3 : 1 : 1

Total capital of the firm = Capital of new partner × Reciprocal of his profi

5
Total capital of the firm = 14, 000 × = 70, 000
1

New Capital :

3
A = 70, 000 × = 42, 000
5

1
B = 70, 000 × = 14, 000
5

Particulars A B
New Capital 42,000 14,000
Less: Existing Capital 37,575 18,525
4,425 (4,525)
Net Effect
to be brought in to be withdrawn

Cash at Bank Account

Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs
Balance b/d 22,500 Balance c/d 36,500
C’s Capital A/c 14,000
36,500 36,500

Page No 3.114:

ANSWER:

Revaluation Account
Dr. Cr.

Amount Amount
Particulars Particulars
Rs Rs

Provision for Doubtful Debts 2,000 Building Share
5,000

Machinery 3,000 Bad Debts Recovered 3,500

Cash A/c 3,500

8,500 8,500

Partners’ Capital Accounts

Dr. Cr.

Particulars A B C Particulars A B C

Current A/c 2,000 8,000 Balance b/d 50,000 32,000

Balance c/d 60,000 30,000 30,000 General 4,000 2,000
Reserve
Premium for 8,000 4,000
Goodwill
Cash 30,000

62,000 38,000 30,000 62,000 38,000 30,000

Balance Sheet

Amount Amount
Liabilities Assets
Rs Rs

Bills Payable 19,000 Stock 10,000

Creditors 20,000 Machinery 23,000
A’s Current A/c 2,000 Debtors 47,000

B’s Current A/c 8,000 Building 45,000

Capital Cash 44,000
A 60,000
B 30,000 
Share
C 30,000 1,20,000

1,69,000 1,69,000
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Working Notes:

WN 1:

Calculation of Adjustment of Capital:

1
C's Capital for th share = Rs 30,000
4

4
So, Total capital of the Firm would be = 30, 000 × = Rs 1,20,000
1

After deducting C's Capital,

Total Capital of A and B would be =1,20,000− 30,000=Rs 90,000

2
A's New Capital = 90,000 × = Rs 60,000
3

1
B's New Capital = 90,000 × = Rs 30,000
3

WN 2: Calculation of Cash Balance

Cash Balance = 2,000 + 30,000 + 12,000 + 3,500 - 3,500 = Rs 44,000

Page No 3.114:

ANSWER:

Books of ….
Journal
Debit Credit
Date Particulars L.F. Amount Amount
Rs Rs
Bank A/c Dr. 1,50,000
To C’s Capital A/c 1,00,000
To Premium for Goodwill A/c 50,000
(Capital and Goodwill amount brought in by C)

Premium for Goodwill A/c Dr. 50,000

To A’s Capital A/c 30,000
To B’s Capital A/c 20,000
(Goodwill brought in by C credited to old partners’
capital accounts in their sacrificing ratio) 
Share

Plant A/c Dr. 10,000

Creditors A/c Dr. 7,000
To Revaluation A/c 17 000
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To Revaluation A/c 17,000
(Plant value appreciated and creditors liability reduced)

Revaluation A/c Dr. 24,500

To Provision for Doubtful Debts A/c 4,500
To Liability for Compensation A/c 10,000
To Stock A/c 10,000
(Stock value decreased, provision against debtors
created, workers liability increased)

A’s Capital A/c Dr. 4,500

B’s Capital A/c Dr. 3,000
To Revaluation A/c 7,500
(Revaluation loss distributed among old partners in
their old ratio)

General Reserve A/c Dr. 50,000

To A’s Capital A/c 30,000
To B’s Capital A/c 20,000
(General Reserve distributed between old partners in
their old ratio)

Balance Sheet
as on April 01, 2016 after C’s admission
Amount Amount
Liabilities Assets
Rs Rs

Sundry Creditors
68,000 Debtors 90,000
(75,000 – 7,000)
Less: Provision
Liability for Compensation 10,000 4,500 85,500
for Doubtful Debts
Plant 1,60,000
Capital A/cs: Patents 50,000
A 1,80,000 Stock 90,000
Cash at Bank (10,000 + 
B 1,20,000 1,60,000
Share
50,000 +1,00,000)
C 1,00,000 4,00,000

Current A/c:
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A 25,500
B 42,000 67,500
5,45,500 5,45,500

Working Notes

1
C is admitted for share
4

Let the total share = 1

1 3
Remaining share = 1 − =
4 4

Old ratio = 60 : 40 or 3 : 2

3 3 9
A = × =
4 5 20

3 2 6
B = × =
4 5 20

1 5
C = or
4 20

New profit sharing ratio = 9 : 6 : 5

1
C is admitted for share with 1, 00, 000 capital
4

Total capital of the firm = 1, 00, 000 × 4 = 4, 00, 000

New Capital :

9
A = 4, 00, 000 × = 1, 80, 000
20

6
B = 4, 00, 000 × = 1, 20, 000
20

Particulars A B
New Capital 1,80,000 1,20,000
Less: Existing Capital 2,05,500 1,62,000
(25,500) (42,000)
Net Effect
to be withdrawn to be withdrawn

Partners’ Capital Accounts

Dr.
Particulars A B C Particulars A

Revaluation A/c 4,500 3,000Balance b/d 1,50,000 1,2

Bank A/c 
Balance c/d 2,05,500 1,62,000 1,00,000 Premium for Goodwill A/c 30,000Share
2
General Reserve A/c 30,000 2

2,10,000 1,65,000 1,00,000 2,10,000 1,6

Balance c/d 1,80,000 1,20,000 1,00,000 Balance b/d 2,05,500 1,6

Current A/c 25,500 42,000
2,05,500 1,62,000 1,00,000 2,05,500 1,6

Page No 3.115:

ANSWER:

Let the total share be = 1

1
Z is admitted for share
5

1 4
Remaining share = 1 - =
5 5

Total combined capital of X and Y after adjustment = 2,40,000 + 1,80,000 = Rs 4,20,000

Total capital of the firm =Total combined capital of X and Y × Reciprocal of Share of

5
Total capital of the firm = 4,20,000 × = 5,25,000
4

Z's share of capital = Total Capital of the firm × Profit share of the new partner

1
Z's share of capital = 5,25,000 × = Rs 1,05,000
5

Page No 3.115:

ANSWER:

Revaluation Account
Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs 
Share
Provision for Doubtful Debts A/c 5,000 Land and Building A/c 25,000

Profit transferred to: Stock A/c 10,000

X’s Capital A/c 18,000
Y’s Capital A/c 12 000 30 000
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Y s Capital A/c 12,000 30,000
35,000 35,000

Partners’ Capital Accounts

Dr. Cr.
Particulars X Y Z Particulars X Y Z

Balance c/d 85,000 60,000 36,250 Balance b/d 25,000 20,000

Bank A/c 36,250
Premium for
15,000 10,000
Goodwill A/c
General Reserve A/c 21,000 14,000
Workmen
Compensation 6,000 4,000
Reserve A/c
Revaluation A/c 18,000 12,000
85,000 60,000 36,250 85,000 60,000 36,250

Balance Sheet (after Z’s admission)

as on ….
Amount Amount
Liabilities Assets
Rs Rs

Creditors 30,000 Debtors 30,000

Less: Provision
Workmen Compensation Reserve 5,000 7,500 22,500
for Doubtful Debts
Land and Building 45,000
Capital A/c: Plant and Machinery 25,000
X 85,000 Stock (30,000 + 10,000) 40,000
Y 60,000 Cash at Bank 83,750
Z 36,250 1,81,250

2,16,250 2,16,250
Share

Working Notes

Let the total share be = 1

1
Z is admitted for share, i.e. 20%
5

1 4
Remaining share = 1 - =
5 5

Total Capital of X and Y after adjustment = 85,000 + 60,000 = Rs 1,45,000

Total capital of the firm =Total combined capital of X and Y × Reciprocal of Share of

5
Total capital of the firm = 1,45,000 × = 1,81,250
4

Z's share of capital = Total Capital of the firm × Profit share of the new partner

1
Z's share of capital = 1,81,250 × = 36,250
5

Cash at Bank Account

Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs
Balance b/d 22,500 Balance c/d 83,750
C’s Capital A/c 36,250
Premium for Goodwill A/c 25,000
83,750 83,750

Page No 3.115:

ANSWER:

Revaluation Account
Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs
Stock A/c 1,150 Provision for Doubtful Debts A/c 2,000
Furniture A/c 1,500 Loss transferred to:
Outstanding Liabilities A/c 1,000 A’s Capital A/c 990
B’s Capital A/c 660 1,650

3,650 Share
3,650

Partners’ Capital Accounts

Dr. Cr.
Particulars A B C Particulars A B C

Investment
6,000 4,000 Balance b/d 35,000 30,000
A/c
Revaluation
990 660 Cash A/c 23,450
A/c
Premium for
Balance c/d 40,310 30,040 23,450 6,300 700
Goodwill A/c
General Reserve A/c 6,000 4,000
47,300 34,700 23,450 47,300 34,700 23,450

Balance Sheet
as on April 01, 2017 after C’s admission
Amount Amount
Liabilities Assets
Rs Rs

Creditors 37,000 Debtors 19,000

Furniture (15,000 – 1,500) 13,500
Investments (20,000 – 10,000) 10,000
Capital A/c: Machinery 33,000
X 40,310 Stock (23,000 – 1,150) 21,850
Y 30,040 Cash 33,450
Z 23,450 93,800

1,30,800 1,30,800

Working Notes

WN 1: Calculation of Capital
Let the total share be 1

C is admitted for
1
share 
4
Share
1 3
Remaining share = 1 - =
4 4

Total Capital of A and B after adjustment = 40,310 + 30,040 = Rs 70,350

Total capital of the firm =Total combined capital of A and B × Reciprocal of Share of

4
Total capital of the firm = 70,350 × = 93,800
3

C's share of capital = Total Capital of the firm × Profit share of the new partner

1
C's share of capital = 93,800 × = 23,450
4

WN 2: Calculation of Sacrificing Ratio

Sacrificing Ratio = Old ratio - New ratio

3 3 9
Sacrifice made by A = - =
5 8 40

2 3 1
Sacrifice made by B = - =
5 8 40

Sacrificing ratio = 9 : 1

Cash Account

Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs

Balance b/d 12,000 Bank Loan A/c 9,000

C’s Capital A/c 23,450
Premium for Goodwill A/c 7,000 Balance c/d 33,450

42,450 42,450

Page No 3.116:

ANSWER:

Journal

Date Particulars L.F. Debit C


Share
Amount A

Revaluation A/c Dr. 14,700

To Typewriter A/c

To Fixed Assets A/c

(Decrease in value of typewriter and fixed assets transferred to

Revaluation Account)

Stationery A/c Dr. 1,000

Investment A/c Dr. 2,000

To Revaluation A/c

(Increase in stationery and investment transferred to

Revaluation Account)

X’s Capital A/c Dr. 7,800

Y’s Capital A/c Dr. 3,900

To Revaluation A/c

(Revaluation loss transferred to X and Y’s Capital Account in

their old ratio)

Reserve Fund A/c Dr. 18,000

To X’s Capital A/c

To Y’s Capital A/c

(Reserve Fund distributed)

Cash A/c Dr. 55,000

To Z’s Capital A/c

To Premium for Goodwill A/c

(Z brought capital and share of goodwill) 

To X’s Capital A/c

To Y’s Capital A/c

(Premium for Goodwill distributed between X and Y in their

sacrificing ratio i.e 2:1)

X’s Capital A/c Dr. 5,000

Y’s Capital A/c Dr. 2,500

To Cash

(Half of the Premium for Goodwill withdrawn by X and Y)

X’s Capital A/c Dr. 10,000

To Investments A/c

(X took over the Investment)

Cash A/c Dr. 4,800

To X’s Capital A/c

(X’ brought cash to make up deficiency in capital)

Y’s Capital A/c Dr. 26,600

To Cash A/c
(Y withdrew excess capital after all adjustments)

Cash A/c Dr. 1,000

To Bad Debts Recovered A/c

(Amount received from customer which was written-of as Bad
Debts)


Share

Cash Account

Dr. Cr.

Amount Amount
Particulars Particulars
Rs Rs

Balance b/d 5,000 X’s Capital (Goodwill) 5,000

Z’s Capital 40,000 Y’s Capital (Goodwill) 2,500

Premium for Goodwill 15,000 Y’s Capital 26,600

Bad Debts Recovered 1,000
X’s Capital 5,800 Balance c/d 32,700

66,800 66,800

Revaluation Account

Dr. Cr.

Amount Amount
Particulars Particulars
Rs Rs

Typewriter (5,000 × 20%) 1,000 Investment 2,000

Fixed Assets (1,37,000 × 10%) 13,700 Stationery 1,000

Loss transferred to

X Capital 7,800

Y Capital 3,900

14,700 14,700


Partners’ Capital Accounts Share
Dr. Cr.

Particulars X Y Z Particulars X Y Z

l i l b/d
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Revaluation 7,800 3,900 Balance b/d 75,000 62,000

Investment 10,000 Reserve 12,000 6,000

Fund

Cash 5,000 2,500 Cash 40,000

(withdraw
of goodwill)

Balance c/d 74,200 66,600 40,000 Premium 10,000 5,000

for
Goodwill

97,000 73,000 40,000 97,000 73,000 40,000

Cash 26,600 Balance b/d 74,200 66,600 40,000

Balance c/d 80,000 40,000 40,000 Cash 5,800

adjusted

80,000 66,600 40,000 80,000 66,600 40,000

Balance Sheet

as on March 31, 2016 after Z’s admission

Amount Amount
Liabilities Assets
Rs Rs

Sundry Creditors 25,000 Cash 32,700

Capital A/cs: Sundry Debtors 15,000

X 80,000 Stock 10,000

Y 40,000 Typewriter (5,000 – 1,000) 4,000

Z 40,000 1,60,000 Fixed Assets (1,37,000 – 13,700) 1,23,300


1,85,000 Share
1,85,000

Working Notes:

WN1: Sacrificing Ratio

WN2: Distribution of Revaluation Loss

WN3: Distribution of Premium for Goodwill

WN4: Adjustment of Capital

Total Capital of the firm on the basis of Z’s share

Total Capital of the firm = 1,60,000

Less: Z’s Capital = 40,000

Combined Capital of X and Y = 1,20,000

Page No 3.116:


ANSWER: Share

Journal

Date Debit Credit

Particulars L.F. Amount Amount

Rs Rs

2016

Apr. Revaluation Dr. 18,000

01 A/c

To Investments A/c 12,0

To Plant A/c 6,0

(Decrease in investments and

plant transferred to Revaluation
Account)

Apr. Creditors A/c Dr. 3,000

To Revaluation A/c 3,0

(Decrease in creditors transferred

to Revaluation Account)

Apr. Hari’s Capital Dr. 7,500

01 A/c
Ram’s Capital Dr. 7,500
A/c
To Revaluation A/c 15,0

(Revaluation loss distributed

between Hari and Ram in their
old ratio i.e. 1:1)

Apr. Bank A/c Dr. 63,000

To Suraj’s Capital A/c 23,0

To Premium for Goodwill A/c 40,0


Share
(Suraj brought capital and share

of goodwill)

Apr. Premium for Dr. 40,000

01 Goodwill A/c

To Hari’s Capital A/c 40,0

(Goodwill brought by Suraj

transferred to Hari’s Capital
Account)

Apr. Hari’s Capital Dr. 30,000

01 A/c

To Bank A/c 30,0

(Hari withdraw Rs 30,000 on

account of goodwill)

2017

Mar. Profit and Dr. 60,000

31 Loss
appropriate
A/c

To Hari’s Capital A/c 20,0

To Ram’s Capital A/c 30,0

To Suraj’s Capital A/c 10,0

(Profit earned after Suraj’s

admission distributed)

Revaluation Account

Dr. Cr.

Amount Amount
Particulars Particulars
Rs Rs

Share
Investments (30,000 12,000 Creditors 3,000
– 18,000)

Plant (35,000 – 6,000 Loss transferred to

29,000)

Hari Capital 7,500

Ram Capital 7,500

18,000 18,000

Partners’ Capital Accounts

Dr.

Particulars Hari Ram Suraj Particulars Hari Ram

Revaluation 7,500 7,500 Balance 60,000 60,00

b/d

Bank 30,000 Premium 40,000

(withdrawal for
of Goodwill
Goodwill)

Balance 62,500 52,500

c/d

1,00,000 60,000 1,00,000 60,00

Bank 15,000 22,500 7,500 Balance 62,500 52,50

(Drawings) c/d

Bank

Balance 67,500 60,000 25,500 Profit and 20,000 30,00

c/d Loss
Appropriation

82,500 82,500 33,000 82,500 82,50

Balance Sheet 
Share
as on March 31, 2017

Liabilities Amount Assets Amount

Rs Rs

Creditors (1,05,000 – 3,000) 1,02,000 Cash at Bank 88,0

Capital A/cs: Book Debts 60,0

Hari 67,500 Stock 50,0

Ram 60,000 Investments 18,0

(30,000 –
12,000)

Suraj 25,500 1,53,000 Furniture 10,0

Plant 29,0

2,55,000 2,55,0

Working Notes

WN1

Hari Sacrifices share in favour of Suraj

WN2

Calculation of Suraj’s Capital

Let the combined share of all partners be = 1 

Share
Combined share of Hari and Ram = 1 − Suraj’s share

Combined Capital of Hari and Ram after all adjustments = 62,500 + 52,500 = Rs 1,15,000

WN3

Distribution of Profit earned after Suraj’s admission

Bank Account

Dr. Cr.

Amount Amount
Particulars Particulars
Rs Rs

Balance b/d 40,000 Hari’s Capital 30,000

(Goodwill)

Suraj’s Capital 23,000 Hari’s Capital 15,000

(Drawings)

Premium for 40,000 Ram’s Capital 22,500

Goodwill (Drawings)

Revenue (Profit) 60,000 Suraj’s Capital 7,500

(Drawings)

Balance c/d 88,000

1,63,000 1,63,000

WN4

Share
Journal entry for recording drawings of partners

Debit Credit

Particulars L.F. Amount Amoun

Rs Rs

Hari’s Capital A/c Dr. 15,000

Ram’s Capital A/c Dr. 22,500

Suraj’s Capital A/c Dr. 7,500

To Bank A/c 45,000

(Drawings made by partners)

Page No 3.117:

ANSWER:

Revaluation Account
Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs

Provision for Doubtful Debts A/c 100 Building A/c 6,350

Stock 750
Furniture 500
Profit transferred to:
A’s Capital A/c 3,000
B’s Capital A/c 2,000 5,000
6,350 6,350


Share
Partners’ Capital Accounts
Dr. C
Particulars A B C Particulars A B C

Balance c/d 40,500 23,500 21,000 Balance b/d 29,000 15,000

Bank A/c 21,00
Premium for Goodwill A/c 2,500 2,500
Revaluation A/c 3,000 2,000
General Reserve A/c 3,000 2,000
Workmen Compensation
3,000 2,000
Reserve A/c

40,500 23,500 21,000 40,500 23,500 21,00

Balance c/d 52,500 31,500 21,000 Balance b/d 40,500 23,500 21,00
Cash A/c 12,000 8,000
52,500 31,500 21,000 52,500 31,500 21,00

Balance Sheet
as on April 01, 2017 after C’s admission
Amount Amount
Liabilities Assets
Rs Rs

Creditors 30,000 Debtors 9,400

Less: Provision for
Outstanding Expenses 2,500 500 8,900
Doubtful Debts
Machinery 9,000
Building 51,350
Furniture (5,000 – 500) 4,500
Capital A/c: Stock (15,000 – 750) 14,250
A 52,500 Cash 49,500
B 31,500
C 21,000 1,05,000

1,37,500 1,37,500

Working Notes: 
Share
WN 1: Calculation of Goodwill

Total Capital of the firm = A’s Capital + B’s Capital + C’s Capital + General Reserve

Total Capital of the firm = 29, 000 + 15, 000 + 21, 000 + 5, 000 + 5, 000 + 5, 000 =

Capital of the firm = Capital of New Partner × Reciprocal of his profit share

Capital of the firm = 21,000 × 5 = Rs 1,05,000

Goodwill = 1,05,000 - 80,000 = Rs 25,000

1
C's share of goodwill = 25,000 × = 5,000
5

WN 2: Calculation of Sacrificing Ratio

Old ratio = 3 : 2

New ratio = 5 : 3 : 2

3 5 1
Sacrifice made by A = − =
5 10 10

2 3 1
Sacrifice made by B = − =
5 10 10

Therefore, sacrificing ratio between A and B is 1 : 1.

WN 3: Calculation of New Capital and Adjustment for Cash

New Capital

5
A = 1,05,000 × = 52,500
10

3
B = 1,05,000 × = 31,500
10

Particulars A B
New Capital 52,500 31,500
Less: Existing Capital 40,500 23,500
12,000 8,000
Net Effect
to be brought in to be brought in

Cash Account
Dr. Cr.
Particulars Amount Particulars Amount
Rs Rs

Balance b/d 3,500 Balance c/d 49,500

C’s Capital A/c 21,000 
Premium for Goodwill A/c 5,000 Share
Amit’s Capital A/c 12,000
Sumit’s Capital A/c 8,000
49,500 49,500
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Page No 3.117:

ANSWER:

Revaluation Account
Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs
Profit transferred to: Plant and Machinery A/c 14,000
Ishu’s
18,480 Provision for Doubtful Debts A/c 7,000
Capital A/c
Vishu’s
12,320 30,800 Creditors A/c 9,800
Capital A/c
30,800 30,800

Partners’ Capital Accounts

Dr.
Particulars Ishu Vishu Nishu Particulars Ishu Vishu

Balance b/d 1,19,000 1,12,000

Bank A/c
Balance c/d 1,53,080 1,34,720 56,000 Premium for Goodwill A/c 8,400 5,600
Revaluation A/c 18,480 12,320
General Reserve A/c 6,000 4,000
Investment Fluctuation
1,200 800
Reserve A/c

1,53,080 1,34,720 56,000 1,53,080 1,34,720


Share
Cash A/c 22,720 Balance b/d 1,53,080 1,34,720
Balance c/d 1,68,000 1,12,000 56,000 Cash A/c 14,920
1,68,000 1,34,720 56,000 1,68,000 1,34,720

Balance Sheet
as on April 01, 2015 after Nishu’s admission
Amount Amount
Liabilities Assets
Rs Rs

Creditors (66,000 – 9,800) 56,200 Debtors 42,000

Plant and Machinery
84,000
(70,000 + 14,000)
Building 98,000
Capital A/cs: Investments 19,000
Ishu 1,68,000 Cash at Bank 1,49,200
Vishu 1,12,000
Nishu 56,000 3,36,000

3,92,200 3,92,200

Working Notes

WN 1: Calculation of New Profit Sharing Ratio

Let the total share be 1

1
Nishu is admitted for
6

1 5
Remaining share = 1- =
6 6

Old ratio = 3 : 2

New Profit sharing ratio :

3 5 15
Ishu = × =
5 6 30

2 5 10
Vishu = × =
5 6 30

1 5
Nishu = or
6 30

NPR = 15 : 10 : 5 or 3 : 2 : 1

WN 2: Calculation of New Capital 

Share
1
Nishu's is admitted for share with 56,000 capital
6

6
Total capital of the firm = 56,000 × = 3,36,000
1

3
Ishu = × 3,36,000 = 1,68,000
6

2
Vishu = × 3,36,000 = 1,12,000
6

WN 3: Adjustment for Cash

Ishu = 1,68,000 – 1,53,080 = 14,920 (To be brought in)

Vishu = 1,12,000 – 1,34,720 = (22,720) (To be withdrawn)

Cash at Bank Account

Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs

Balance b/d 87,000 Vishu’s Capital A/c 22,720

Nishu’s Capital A/c 56,000 Balance c/d 1,49,200
Premium for Goodwill A/c 14,000
Ishu’s Capital A/c 14,920
1,71,920 1,71,920

Page No 3.118:

ANSWER:

Revaluation Account
Dr.

Amount
Particulars Particulars
Rs

Stock 70,000 Provision for Doubtful Debts


Profit : Building Share

X 21,000 Bad Debts Recovered

Y 14,000 35,000 Accrued Income
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1,05,000

Partners’ Capital Accounts

Dr.

Particulars X Y Z Particulars X Y

Advertisement 6,000 4,000 Balance b/d 1,76,000 2,54,

Goodwill 6,000 4,000 Revaluation 21,000 14,
A/c
Bank A/c 20,000 Premium 72,000 36,
(b/fig.) for
Goodwill
Balance c/d 4,00,000 3,00,000 3,00,000 Z’s Current 48,000 24,
A/c

Z’s Loan
A/c
Bank A/c 95,000
(b/fig.)

4,12,000 3,28,000 3,00,000 4,12,000 3,28,

Balance Sheet

Amount Amount
Liabilities Assets
Rs Rs

Investment
5,000 Investment 45,000
Fluctuation Reserve
Workmen 10,000 Stock 2,30,000
Share
Compensation
Reserve
Claim for Workmen 10,000 Bank 4,73,000
Compensation
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X’s Current A/c 3,000 Debtors 1,00,000

Y’s Current A/c 1,500 Less : Prov. for DD 5,000 95,000
Capital Building 1,10,000
X 4,00,000 Accrued Income 10,000
Y 3,00,000 Z’s Current A/c 76,500
Z 3,00,000 10,00,000
Employees 10,000
Provident fund

10,39,500 10,39,500

Working Notes:
WN 1: Calculation of Sacrificing and New Ratio
3 1 1
X's Sacrifice = × =
5 3 5

1
Y's Sacrifice =
10

X:Y = 2:1

3 1 2 2 4
X's New Share = − = × =
5 5 5 2 10

2 1 3
Y's New Share = − =
5 10 10
1 1 3
Z's New Share = + =
5 10 10

X:Y:Z = 4:3:3

WN 2: Calculation of Goodwill
4,80,000+9,30,000+13,80,000
Average Profit = Rs 9,30,000 =
3

Normal Profit= Rs 6,30,000

Super Profit = Rs 3,00,000 = 9,30,000 − 6,30,000

Goodwill = 3, 00,000 × 2 = Rs 6,00,000

WN 3 :Treatment of Reserves

Workmen Compensation Reserve and Investment Fluctuation Reserve = 10,000 + 5,000 = Rs 15,000

3
R's share in Workmen Compensation Reserve and Investment Fluctuation Reserve = 15,000 × =
10

Rs 4,500 to be shared by X&Y in the ratio of 2:1

Journal

Share
Debit Credit
Date Particulars L.F. Amount Amount
(Rs) (Rs)
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Z’s Current A/c Dr. 4,500

To X’s Current A/c 3,000
To Y’s Current A/c 1,500

(Adjustment entry made for Workmen

Compensation Reserve and Investment
Fluctuation Reserve)

WN4: Adjustment of Capitals

3
Z's Capital for th share = Rs 3,00,000 ( Loan of Z)
10
10
So, Total capital of the firm would be = 3, 00, 000 × = Rs 10,00,000
3

4
X's new Capital = 10, 00,000 × = Rs 4,00,000
10
3
Y's new Capital = 10, 00,000 × = Rs 3,00,000
10

WN 5: Amount of Bank Balance

Closing Bank Balance = 2,50,000 + 1,08,000 + 95,000 + 40,000 - 20,000 = Rs 4,73,000

WN 6: Amount to be transferred to Z’s Current A/c

Amount to be transferred to Z’s Current A/c = 48,000 + 24,000 + 4,500 = Rs 76,500

WN 7: Calculation of Goodwill brought in by Z

3
Z's share = × 6, 00, 000 = 1, 80, 000
10

Amount brought in cash = 60% × 1, 80, 000 = 1, 08, 000

2
X's Capital A/c = × 1, 08, 000 = 72, 000
3
1
Y's Capital A/c = × 1, 08, 000 = 36, 000
3

Page No 3.119:

ANSWER:

Journal

Date Particulars L.F. Debit Credit
Share
Amount Amount

Rs Rs

A’s Capital A/c Dr. 15,000

B’s Capital A/c Dr. 5,000

To Goodwill A/c 20,000

(Goodwill written-off)

Revaluation A/c Dr. 10,000

To Plant A/c 6,000

To Stock A/c 1,000

To Reserve for Doubtful Debts A/c 3,000

(Decrease in Plant and stock and creation of Reserve

for Doubtful Debts transferred to Revaluation
Account)

A’s Capital A/c Dr. 7,500

B’s Capital A/c Dr. 2,500

To Revaluation A/c 10,000

(Revaluation loss transferred to partners’ capital

accounts in old ratio)

Bank A/c Dr. 55,000

To C’s Capital A/c 35,000

To Premium for Goodwill A/c 20,000

(C brought capital and Premium for Goodwill)

Premium for Goodwill A/c Dr. 20,000

To A’s Capital A/c 15,000


To B’s Capital A/c Share
5,000

(Premium for Goodwill distributed between A and B

in sacrificing ratio)

Revaluation Account

Dr. Cr.

Amount Amount
Particulars Particulars
Rs Rs

Plant (30,000 ´ 20%) 6,000

Stock (10,000 ´ 10%) 1,000 Loss

transferred
to

Reserve for Doubtful Debts 3,000 A 7,500

Capital

(30,000 ´ 10%) B 2,500

Capital

10,000 10,000

Partners’ Capital Accounts

Particulars A B C Particulars A B C

Goodwill 15,000 5,000 Balance b/d 50,000 30,000

Revaluation 7,500 2,500 Premium 15,000 5,000

(Loss) for
Goodwill

Balance c/d 42,500 27,500

65,000 35,000 65,000 35,000

Balance c/d 42,500 27,50

Balance c/d 42,500 27,500 35,000 Bank 35,000

Share
42,500 27,500 35,000 42,500 27,500 35,000

Balance Sheet

as on April 01, 2016 after C’s admission

Amount Amount
Liabilities Assets
Rs Rs

Capital A/cs: Plant (30,000 – 6,000) 24,000

A 42,500 Stock (10,000 – 1,000) 9,000

B 27,500 Debtors 30,000

C 35,000 1,05,000 Less: Reserve for D. 3,000 27,000

Debts

Sundry Creditors 20,000 Cash at Bank 65,000

1,25,000 1,25,000

Working Notes

WN1

WN2
Writing-off of Goodwill

WN3
Distribution of Premium for Goodwill 
Share

WN4
Calculation of C’s share of capital

Combined Capital of A and B after adjustments = 42,500 + 27,500

= 70,000

Bank Account

Dr. Cr.

Amount Amount
Particulars Particulars
Rs Rs

Balance b/d 10,000

C’s Capital 35,000

Premium for Goodwill 20,000 Balance c/d 65,000

65,000 65,000

Page No 3.119:

ANSWER:

Partner’ Capital Accounts

Dr.

Particulars A B C Particulars A B 
Share

Balance 3,00,000 3,00,000

b/d

B k
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Bank

Premium 16,000 4,000

for
Goodwill

Balance 3,16,000 3,04,000 2,00,000

c/d

3,16,000 3,04,000 2,00,000 3,16,000 3,04,000

Bank 1,16,000 1,04,000 Balance 3,16,000 3,04,000

b/d

Balance 2,00,000 2,00,000 2,00,000

c/d

Proportionate

3,16,000 3,04,000 2,00,000 3,16,000 3,04,000

Balance Sheet

as on April 01, 2016 after C’s admission

Amount Amount
Liabilities Assets
Rs Rs

Sundry Creditors 60,000 Cash at Bank 40,000

Outstanding Expenses 15,000 Sundry Debtors 36,000

Capital A/cs: Stock 84,000

A 2,00,000 Furniture and

65,000
Fittings

B 2,00,000 Plant and

4,50,000
Machinery

C 2,00,000 6,00,000 
Share
6,75,000 6,75,000

Bank Account

Dr. Cr.

Amount Amount
Particulars Particulars
Rs Rs

Cash 40,000 A’s Capital 1,16,000

C’s Capital 2,00,000 B’s Capital 1,04,000

Premium for
20,000
Goodwill

Balance c/d 40,000

2,60,000 2,60,000

Calculation of Goodwill


Share

Goodwill = Super Profit × Number of Years Purchases

= 30,000 × 2 = Rs 60,000

Debit Credit

Particulars L.F. Amount Amoun

Rs Rs

Premium for Goodwill Dr. 20,000

To A’s Capital A/C Dr. 16,000

To B’s Capital A/c 4,000

(Premium for Goodwill distributed between A and B in their

sacrificing ratio i.e. 4:1)

Calculation of Proportionate Capital

Capital of the firm is Rs 6,00,000

Page No 3.119:


ANSWER: Share

Revaluation Account

Dr. Cr.

Amount Amount
Particulars Particulars
Rs Rs

Plant 7,000 Building 14,000

Provision for D. 700

Debts (1,000 –
300)

Profit transferred
to

Jain Capital 3,600

Gupta 2,700
Capital

14,000 14,000

Partner’s Capital Accounts

Dr.

Jain Gupta Mishra Particulars Jain Gupta

Balance 70,000 60,000

b/d

Revaluation 3,600 2,700

Balance 85,600 71,700 Premium 12,000 9,000

c/d for
Goodwill

85,600 71,700 85,600 71,700

Balance 85,600 71,700

b/d

Cash

Balance 85,600 71,700 52,433


c/d Share
85,600 71,700 52,433 85,600 71,700

Balance Sheet

as on April 01, 2017 after Mishra’s admission

Amount Amount
Liabilities Particulars
Rs Rs

Sundry Creditors 20,000 Cash 88,233

Bills Payable 3,000 Debtors 20,500

Bank Over draft 17,000 Less: Prov. for D. 1,000 19,500

Debts

Capital A/cs: Stock 20,000

Jain 85,600 Plant (40,000 – 7,000) 33,000

Gupta 71,700 Building (75,000 + 14,000) 89,000

Mishra 52,433 2,09,733

2,49,733 2,49,733

Working Notes

WN1

WN2

Distribution of Revaluation Profit


Share

WN3

Calculation of Mishra’s Capital

Combined Capital of Jain and Gupta after all adjustments = 85,600 + 71,700 = Rs 1,57,300

WN4

Cash Account

Dr. Cr.

Amount Amount
Particulars Particulars
Rs Rs

Balance b/d 14,800

Mishra’s Capital 52,433

A/c

Premium for 21,000 Balance c/d 88,233

Goodwill

88,233 88,233

Page No 3.120:

ANSWER:

Revaluation Account
Dr. Cr.

Amount Share
Amount
Particulars Particulars
Rs Rs

Plant and Machinery A/c 2,000 Land and Building A/c 4,000
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Provision for Doubtful Debts A/c 4,000

Profit transferred to:
Neha’s Capital A/c 3,600
Tara’s Capital A/c 2,400 6,000
8,000 8,000

Partners’ Capital Accounts

Dr. Cr.
Particulars Neha Tara Prachi Particulars Neha Tara Prachi

Balance c/d 26,600 22,400 12,250 Balance b/d 8,000 10,000

Bank A/c 12,250
Premium for Goodwill
6,000 4,000
A/c
General Reserve A/c 7,200 4,800
Workmen
Compensation Fund 1,800 1,200
A/c
Revaluation A/c 3,600 2,400
26,600 22,400 12,250 26,600 22,400 12,250

Balance Sheet
as on April 01, 2012 after Prachi’s admission
Amount Amount
Liabilities Assets
Rs Rs

Creditors 15,000 Debtors 19,000

Workmen Compensation
2,000 Land and Building 18,000
Reserve
Plant and Machinery (12,000 –
10,000
2,000)
Capital A/c: Stock 6,000
Neha 26,600 Cash 25,250
Tara 22,400 Share
Prachi 12,250 61,250

78,250 78,250
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Working Notes

Let the total share = 1

1
Prachi enters for share
5

1 4
Remaining share = 1 - =
5 5

Total adjusted capital of Neha and Tara = 26,600 + 22,400 = 49,000

Total capital of the firm = Total combined Capital of Neha and Tara × Reciprocal o

5
Total capital of the firm = 49,000 × = 61,250
4

1
Prachi's share of capital = 61,250 × = 12,250
5

Cash Account
Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs

Balance b/d 3,000 Balance c/d 25,250

Prachi’s Capital A/c 12,250
Premium for Goodwill A/c 10,000

25,250 25,250

Page No 3.121:

ANSWER:

Revaluation Account
Dr. Cr. 
Share
Amount Amount
Particulars Particulars
Rs Rs

Plant and Machinery A/c 5,000 Land and Building A/c 13,000
Outstanding Repairs A/c 100 Provision for doubtful debts A/c 500
Profit transferred to: Creditors A/c 1,200
A’s Capital A/c 6,000
B’s Capital A/c 3,600 9,600
14,700 14,700

Partners’ Capital Accounts

Dr. Cr
Particulars A B C Particulars A B C

Goodwill A/c 6,250 3,750 Balance b/d 55,000 30,000

Investment A/c 6,250 3,750 Bank A/c 23,350
Premium for
Cash A/c 2,400 3,250 1,950
Goodwill A/c
General Reserve A/c 10,000 6,000
Balance c/d 61,750 31,650 23,350 Revaluation A/c 6,000 3,600
74,250 41,550 23,350 74,250 41,550 23,350

Balance Sheet
as on April 01, 2016 after C’s admission
Amount Amount
Liabilities Assets
Rs Rs

Creditors (19,000 – 1,200) 17,800 Debtors 25,000

Bills Payable 8,000 Land and Building 38,000
Outstanding Salaries 2,400 Plant and Machinery 30,000
Provision for Bad and Doubtful
1,000 Investments 4,000
Debts
Outstanding Repairs 100 Prepaid Insurance 500
Capital A/cs: Stock 20,000
A 61,750 Cash 28,550
B 31,650 
C 23,350 1,16,750 Share

1,46,050 1,46,050

Working Notes

Let the total share = 1

1
C enters for share
5

1 4
Remaining share = 1 - =
5 5

Total adjusted capital of A and B = 61,750 + 31,650 = 93,400

Total capital of the firm = Total combined capital of A and B × Reciprocal of their p

5
Total capital of the firm = 93,400 × = 1,16,750
4

1
Prachi's share of capital = 1,16,750 × = 23,350
5

Cash Account
Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs

Balance b/d 2,400 B’s Capital A/c 2,400

C’s Capital A/c 23,350
Premium for Goodwill A/c 5,200
Balance c/d 28,550
31,250 31,250

Page No 3.121:

ANSWER:

Revaluation Account
Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs
Stock 62,000 Provision for Doubtful Debts 10,000
Profit transferred to: Building 2,00,000
X 88,800 
Y 59,200 1,48,000 Share

2,10,000 2,10,000

Partners’ Capital Accounts

Dr.

Particulars X Y Z Particulars X Y

Advertisement 12,000 8,000 Balance b/d 3,52,000 5,08,000

Goodwill 40,800 27,200 Revaluation 88,800 59,200
Balance c/d 7,08,000 6,92,000 6,00,000 Premium for 1,92,000 96,000
Goodwill
Z’s Current A/c 1,28,000 64,000
Bank A/c

7,60,800 7,27,200 6,00,000 7,60,800 7,27,200

Balance Sheet

Amount Amount
Liabilities Assets
Rs Rs

Investment
10,000 Investment 90,000
Fluctuation Reserve
Workmen 20,000 Stock 5,38,000
Compensation
Reserve
Claim for Workmen 20,000 Debtors 2,00,000
Compensation
Z’s Loan A/c 6,00,000 Less : Provision for DD 10,000 1,90,000
X’s Current A/c 6,000 Building 3,20,000
Y’s Current A/c 3,000 Bank 13,88,000
(5,00,000 + 6,00,000 + 2,88,000)

Capital Z’s Current A/c Share
2,01,000
X 7,08,000
Y 6,92,000
Z 6 00 000 20 00 000
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Z 6,00,000 20,00,000
Employees 68,000
Provident Fund

27,27,000 27,27,000

Working Notes:

WN 1: Calculation of Sacrificing Ratio

3 4 2
X's Sacrifice = − =
5 10 10

2 3 1
Y's Sacrifice = − =
5 10 10

X:Y=2:1

WN 2: Calculation of Goodwill
9,60,000+18,60,000+27,60,000
Average Profit = = Rs 18,60,000
3

Normal Profit= Rs 10,60,000

Super Profit =18,60,000 − 10,60,000 = Rs 8,00,000

Goodwill = 8, 00,000 × 2 =Rs 16,00,000

WN 3: Treatment of Reserves

Workmen Compensation Reserve and Investment Fluctuation Reserve = 20,000 +10,000 = Rs30,00

3
Z's share in Workmen Compensation Reserve and Investment Fluctuation Reserve = 30,000 × =
10

Rs 9,000 to be shared by X and Y in the ratio of 2:1

Journal

Debit Credit
Date Particulars L.F. Amount Amount

(Rs) (Rs)

Z’s Current A/c Dr. 9,000

To X’s Current A/c 6,000

To Y’s Current A/c 3,000

(Adjustment entry made for Workmen 

Compensation Reserve and Investment Share
Fluctuation Reserve)

WN 4: Calculation of Z’s Capital

10 3
So, Z's Capital would be 14, 00, 000 × × = Rs 6,00,000
7 10

WN 5: Amount of Goodwill and Capital brought in by Z

(a) Z's share in goodwill = 10
3
× 16, 00, 000 = 4, 80, 000

60
Amount brought in cash = 4, 80, 000 × = 2, 88, 000
100

(b) Amount credited to Partners' Capital A/c:

2
X's Capital A/c = 2, 88, 000 × = 1, 92, 000
3
1
Y's Capital A/c = 2, 88, 000 × = 96, 000
3

(c) Amount adjusted with Current A/c

40
Amount debited to Z's Current A/c = 4, 80, 000 × = 1, 92, 000
100
2
Amount credited to X's A/c = 1, 92, 000 × = 1, 28, 000
3
1
Amount credited to Y's A/c = 1, 92, 000 × = 64, 000
3

(d) Amount of Capital to be brought in by Z

Net Capital of X and Y for 7/10 share of Capital = 14,00,000
10
Total Capital of Firm = 14, 00, 000 × = 20, 00, 000
7
3
Z's Share of Capital = 20, 00, 000 × = 6, 00, 000
10

WN 6: Z Current A/c = 1,28,000 + 64,000 + 9,000 = 2,01,000

Page No 3.122:

ANSWER:

Revaluation Account
Dr. Cr.

Amount Amount
Particulars Particulars
Rs Rs

Provision for Doubtful Debts 2,000 Land and Building 10,000

Profit transferred to: Stock 4,000
A’s Capital A/c 7,200

B’s Capital A/c 4,800 12,000 Share

14,000 14,000

Partners’ Capital Accounts

Dr.

Particulars A B C Particulars A B

Profit and 3,000 2,000 Balance b/d 10,000 10,000

Loss A/c
Balance c/d 34,000 26,000 15,000 Cash A/c
(WN3)
Premium for 6,000 4,000
Goodwill A/c
Revaluation 7,200 4,800
A/c
General 9,000 6,000
Reserve A/c
Workmen 4,800 3,200
Compensation
Reserve A/c

34,000 26,000 15,000 34,000 26,000

Balance Sheet
as at April 01, 2017

Amount Amount
Liabilities Assets
Rs Rs

Capital A/cs: Plant and Machinery 10,000

A 34,000 Land and 8,000
Building
B 26,000 Add: 10,000 18,000
Appreciation

C 15,000 75,000 Debtors 12,000 Share

Workmen Compensation 2,000 Less: Provision for DD 3,000 9,000

Claim
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Creditors 10,000 Stock 16,000

Cash (9,000 + 15,000 + 10,000) 34,000

87,000 87,000

Working Notes:
WN 1: Calculation of adjusted capital balances of A and B
Adjusted Capital of A = 34,000

Adjusted Capital of B = 26,000

Combined Capital of A and B = Rs 60,000
WN 2: Calculation of Total Capital of New Firm

WN 3: Calculation of C’s Capital

Page No 3.122:

ANSWER:

Revaluation Account
Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs

Provision for Doubtful Debts A/c 5,000 Land and Building A/c 1,00,000
Stock A/c 60,000 Investments A/c 5,000
Profit transferred to:
Amit’s Capital A/c 24,000
Sumit’s Capital A/c 16,000 40,000
1,05,000 1,05,000

Share

Partners’ Capital Accounts

Dr. Cr.
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Dr. Cr.
Particulars Amit Sumit Puneet Particulars Amit Sumit Puneet

Cash A/c 60,000 30,000 Balance b/d 1,76,000 2,54,000

Loan from
Puneet’s 3,00,000
A/c
Premium
Balance c/d 2,18,000 2,82,000 3,00,000 for Goodwill 60,000 30,000
A/c
Revaluation
24,000 16,000
A/c
General
Reserve 18,000 12,000
A/c

2,78,000 3,12,000 3,00,000 2,78,000 3,12,000 3,00,000

Balance c/d 4,00,000 3,00,000 3,00,000 Balance b/d 2,18,000 2,82,000 3,00,000
Cash A/c 1,82,000 18,000
4,00,000 3,00,000 3,00,000 4,00,000 3,00,000 3,00,000

Balance Sheet
as on April 01, 2011 after Puneet’s admission
Amount Amou
Liabilities Assets
Rs Rs

Creditors 50,000 Debtors 3,00,000

Less: Provision for
Employees’ Provident Fund 10,000 15,000 2,85,
Doubtful Debts
Investments 55,
Land and Building (3,20,000 + 1,00,000) 4,20,
Capital A/c: Stock (1,10,000 – 60,000) 50,
Amit 4,00,000 Cash at Bank 2,50,
Sumit 3,00,000 
Share
Puneet 3,00,000 10,00,000

10,60,000 10,60,

Working Notes

WN 1: Calculation of Sacrificing Ratio

Old ratio = 3 : 2
1 3 1 2
Amit Sacrifices = × = or
3 5 5 10

1 2 2 1
Sumit Sacrifices = × = or
4 5 20 10

2 1 3
Puneet's Share = + =
10 10 10

Sacrificing ratio between Amit and Sumit is 2 : 1

WN 2: Calculation of Goodwill

3
Puneet's share of goodwill = 3,00,000 × = 90,000
10

WN 3: Calculation of New Profit Sharing Ratio

New Profit sharing ratio:

3 2 4
Amit = − =
5 10 10

2 1 3
Sumit = - =
5 10 10

3
Puneet =
10

New Profit Sharing Ratio = 4 : 3 : 3

WN 4: Calculation of New Capital and Adjustment for Cash

Total Capital of the firm = Rs 10,00,000

4
Amit = × 10,00,000 = 4,00,000
10

3
Sumit = × 10,00,000 = 3,00,000
10

3
Puneet = × 10,00,000 = 3,00,000
10

Particulars Amit Sumit Puneet

New Capital 4,00,000 3,00,000 3,00,000
Less: Existing Capital 2,18,000 2,82,000 3,00,000
1,82,000 18,000
Net Effect NIL 
to be brought in to be brought in Share

Cash at Bank Account

Dr. Cr.
A t A t
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Amount Amount
Particulars Particulars
Rs Rs

Balance b/d 50,000 Amit’s Capital A/c 60,000

Premium for Goodwill A/c 90,000 Sumit’s Capital A/c 30,000
Amit’s Capital A/c 1,82,000 Balance c/d 2,50,000
Sumit’s Capital A/c 18,000
3,40,000 3,40,000

Page No 3.123:

ANSWER:

Revaluation Account

Dr. Cr.

Amount Amount
Particulars Particulars
Rs Rs

Stock 77,500 Land & Building 2,50,000

Investments 55,000 Provision for Doubtful Debts 5,000

Profit transferred to:

X 73,500

Y 49,000 1,22,500

2,55,000 2,55,000


Share

Partners’ Capital Accounts

Dr.

Particulars X Y Z Particulars X Y

Advertisement 15,000 10,000 Balance b/d 4,40,000 6,35,00

Suspense

Goodwill 51,000 34,000 Bank A/c

Balance c/d 11,65,500 9,99,000 9,27,643 Premium 4,30,800 2,15,40

for
Goodwill

Z’s Current 2,87,200 1,43,60

A/c

Revaluation 73,500 49,00

A/c

12,31,500 10,43,000 9,27,643 12,31,500 10,43,00

Partners’ Current Accounts

Dr. Cr.

Particulars X Y Z Particulars X Y Z

X’s Capital 2,87,200 Z’s Current 5,000 2,500

A/c A/c

Y’s Capital 1,43,600 Balance c/d 4,38,300

A/c

X’s Current 5,000

A/c

Y’s Current 2,500

A/c

Balance c/d 5,000 2,500 Share

5,000 2,500 4,38,300 5,000 2,500 4,38,300

Bank Account

Dr. Cr.

Amount Amount
Particulars Particulars
Rs Rs

Balance b/d 6,25,000 Balance c/d 21,98,843

Z’s Capital 9,27,643

Premium for Goodwill 6,46,200

21,98,843 21,98,843

Balance Sheet

as on April 01, 2017 after Z’s admission

Amount Amount
Liabilities Assets
Rs Rs

Workmen Compensation
25,000 Land and Building 4,00,000
Reserve

Employee Provident Fund 85,000 Stock 6,72,500

Capital A/cs: Investments 45,000

X 11,65,500 Bank Balance 21,98,843

Y 9,99,000 Debtors 1,00,000

Z 9,27,643 30,92,143 Less: 5,000 95,000

Provision
for DD

X’s Current 5,000 Z’s Current 4,38,300Share

Y’s Current 2,500

Workmen Compensation 25,000

Claim

Z’s Loan 7,50,000

39,84,643* 38,49,643*

Working Notes:
WN 1: Calculation of Sacrificing Ratio
Sacrificing Ratio = Old Ratio – New Ratio
Old Ratio of X and Y = 3:2
New Ratio of X, Y and Z = 4:3:3
3 4 2
Share surrendered by X = − =
5 10 10

2 3 1
Share surrendered by Y = − =
5 10 10

∴ Sacrificing Ratio of X and Y = 2 : 1

WN 2: Calculation of Z’s Share of Goodwill

12,00,000+23,25,000+34,50,000
Average Profit = = 23, 25, 000
3

Normal Profit = 5, 30, 000

Super Profit = Average Profit − Normal Profit

= 23, 25, 000 − 5, 30, 000 = 17, 95, 000

Goodwill of the firm = 17, 95, 000 × 2 = Rs 35, 90, 000

3
Z's share of Goodwill = 35, 90, 000 × = Rs 10, 77, 000
10

Goodwill brought by cheque = 10, 77, 000 × 60% = 6, 46, 200

∴ Remaining goodwill of Rs 4, 30, 800 will be taken out of his Current A/c

WN 3: For adjustment of Workmen Compensation Reserve and Investment Fluctuation Reserve

Workmen Compensation Reserve = 50,000 – 25,000 = Rs 25,000
In Investment Fluctuation Reserve, no balance after adjustment of change in the value.

Journal entry with respect to Workmen Compensation Reserve:

Journal

Debit Credit
Date Particulars L.F. Amount Amount

Rs Rs

Z’s Current A/c Dr. 7,500* 

Share
To X’s Current A/c 5,000

To Y’s Current A/c 2,500

(Workmen Compensation Reserve

adjusted)

* 25, 000 × 103

= 7, 500

WN 4: Calculation of Z’s Capital

Combined Capital of X and Y = 11,65,500 + 9,99,000 =Rs 21,64,500
Capital of X and Y is for 10
7
thshare

3 10 3
∴ Capital of Z for th share = 21, 64, 500 × × = Rs 9, 27, 643
10 7 10

Note: There seems to be some printing error in the question. The answer as per the above solution
and as per the textbook does not match. Moreover, the Balance Sheet is also not tallying.

Page No 3.92:

ANSWER:

Old Ratio of A and B = 21 : 9

Let the total share be = 1
9
C's Share of Profit =
21

9 12
Remaining Share = 1 − =
21 21

12 21 84
A's Share = × =
21 30 210

12 9 36
B's Share = × =
21 30 210

9 90
C's Share = or
21 210

New Profit Share = 84 : 36 : 90 or 14 : 6 : 15

Page No 3.92:

ANSWER:


Share

Ashok admits for share of profit

Ravi sacrifices in favour of Ashok =

Mukesh sacrifices in favour of Ashok =

New Ratio = Old Ratio − Sacrificing Ratio

Page No 3.92:

ANSWER:

Old ratio of A and B = 7 : 3

7
A's Share =
10

7 1 1
A surrenders in favour of C = × =
10 7 10

7 1 6
A's New Share = − =
10 10 10
3
B's share =
10

3 1 1
B surrenders in favour of C = × =
10 3 10

3 1 2
B's New share = − =

10 10 10

C's share =
1
+
1
=
2
Share
10 10 10

New Profit Ratio = 6 : 2 : 2 or 3 : 1 : 1

Page No 3.92:

ANSWER:

Old Ratio = 1 : 1

Let the total share be = 1

1 5
Share of Black = or
4 20

1 3
Remaining Share = 1 − =
4 4

3 3 9
Red 's Share = × =
5 4 20

2 3 6
White 's Share = × =
5 4 20

New Profit Sharing Ratio = 9 : 6 : 5

Page No 3.92:

ANSWER:

(i) Let the total share be = 1

Old ratio = 2 : 3 : 1

1
W is admitted for 6
th share

1
Z’s share = 6
1 1 1
Total Share of Z and W = + =
6 6 3

1 2
Remaining Share = 1 − =
3 3

Old Ratio between X and Y = 2 : 3

2 2 4
X's New Share = × =
3 5 15

2 3 6
Y's New Share = × =
3 5 15

1 5
Z's Share = or
6 30

1 5 
W's Share =
6
or
30 Share
New Profit share ratio = 8 : 12 : 5 : 5

(ii) Old Ratio = 3 : 2 : 5

1 1 1
A sacrifices = × =
5 5 25

3 1 13
A's New Share = − =
10 25 50

1 1 1
B sacrifices = × =
5 5 25

2 1 8
B's New Share = − =
10 25 50

1 3 3
C sacrifices = × =
5 5 25

5 3 19
C's New Share = − =
10 25 50

1 10
D's Profit Share = or
5 50

New Profit Sharing ratio = 13 : 8 : 19 : 10

Page No 3.92:

ANSWER:

Old ratio = 3 : 2

Let the total share be = 1

1
Z's Share of Profit =
5

1 4
Remaining Share = 1 − =
5 5

4 3 12
X's Share = × =
5 5 25

4 2 8
Y's Share = × =
5 5 25

1 5
Z's Share = or
5 25

New Profit Share = 12 : 8 : 5

Sacrificing ratio = 3 : 2

Note: When nothing has been specified about the new profit sharing ratio, it has been assumed
that the sacrificing ratio will be same as old ratio, i.e. 3 : 2.

Page No 3.92:

Share
ANSWER:

Sacrificing Share = Old Ratio − New Ratio

Page No 3.92:

ANSWER:

Old ratio = 3 : 2
2
Share acquired from X =
7

3 2 11
X's New Share = − =
5 7 35

1
Share acquired from Y =
7

2 1 9
Y's New Share = − =
5 7 35

2 1 3 15
Z's Profit Share = + = or
7 7 7 35

New Profit Sharing Ratio = 11 : 9 : 15

Sacrificing Ratio = Old Ratio − New Ratio

Sacrifice made by X =

3
−
11
=
10 
5 35 35 Share
2 9 5
Sacrifice made by Y = − =
5 35 35

Sacrificing Ratio = 10 : 5 or 2 : 1

Page No 3.92:

ANSWER:

Profit sharing ratio of A and B = 4 : 1

Thus, Profit sharing ratio of B and C will also be 4 : 1

Let B’s Profit Share = 1

Since, C’s share of profit is 25% of B’s Profit Share

1
∴ C's Profit Share = × 1 = 0. 25
4

A’s Profit Share is 4 times the B’s Profit Share, thus, A’s Profit Share = 4

New Profit Share = 4 : 1 : 0.25 or 16 : 4 : 1

Sacrificing Ratio = Old Ratio – New Ratio

4 16 68
A = - =
5 21 105

1 4 17
B = - =
5 21 105

Sacrificing Ratio = 68 : 17 or 4 : 1

Page No 3.93:

ANSWER:

Sacrificing Ratio = Old Ratio × Surrender Ratio


Share

New Ratio = Old Ratio − Sacrificing Ratio

P’s share = X’s Sacrifiece

Q’s share = Y’s Sacrifice

Page No 3.93:


Share
ANSWER:

Sacrificing Ratio = Old Ratio × Surrender Ratio

New Ratio = Old Ratio − Sacrificing Ratio

∴New Profit Sharing Ratio = 75 : 48 : 37

Page No 3.93:

Share

ANSWER:

Calculation of New Profit Sharing Ratio

X:Y:Z = 9 : 6 : 5 (Old Ratio)

1
W's share =
4

1 2
Y's sacrifice = or
10 20

1 1 3
Remaining share of W = − = , Contributed by X & Z in the ratio of 2:1
4 10 20

3 2 2
X's sacrifice = × =
20 3 20

3 1 1
Z's sacrifice = × =
20 3 20

2 2 1
Sacrificing Ratio= : : = 2 : 2 : 1
20 20 20

9 2 7
X's New Share = − =
20 20 20

6 2 4
Y's New Share = − =
20 20 20

5 1 4
Z's New Share = − =
20 20 20

1 5 5
W's New Share = × =
4 5 20

X:Y:Z:W = 7 : 4 : 4 : 5

Page No 3.93:

ANSWER:

D is admitted for share of profit

Let the combined share of profit of A, B C and D be = 1

Combined share of A, B and C after D’s admission = 1 − D’s shares

New Ratio = Old Ratio × combined share of A, B and C


Share

Sacrificing Ratio = Old Ratio − New Ratio

Page No 3.93:


ANSWER: Share

E is admitted for share

Let combined share of profit of all partners after E’s admission = 1

Combined share of A, B, C and D after E’s admission = 1 − E’s Share

New Ratio = Combined of A, B, C and D × Agreed Share of A, B, C and D

Page No 3.93:

ANSWER:

Old ratio = 3 : 2

Let the total share be = 1


Share

1 3
Remaining Share = 1 − =
4 4

A and B decided to share future profits and losses in the ratio of 1 : 1

1 3 3
A's Share = × =
2 4 8

1 3 3
B's Share = × =
2 4 8

1 2
C's Share = or
4 8

New Profit Sharing Ratio = 3 : 3 : 2

Sacrificing Ratio = Old Ratio − New Ratio

3 3 9
Sacrifice made by A = − =
5 8 40

2 3 1
Sacrifice made by B = − =
5 8 40

Sacrificing ratio of A and B = 9 : 1

Page No 3.93:

ANSWER:

X:Y:Z= 1:2:2 (New Ratio)

2
Z's Share =
5

Sacrificing Ratio= 4:1

2 4 8
X's Sacrifice = × =
5 5 25

2 1 2
Y's Sacrifice = × =
5 5 25

1 8 13
X's Old ratio = + =
5 25 25

2 2 12
Y's Old ratio = + =
5 25 25

X:Y= 13:12

Page No 3.93:

ANSWER: 
Share
Since goodwill has been paid privately, thus, no entry will be recorded in the books of the
firm.

Page No 3.93:

ANSWER:

Books of ….
Journal
Debit
Date Particulars L.F. Amoun
Rs
Bank A/c Dr. 48,00
To Premium for Goodwill A/c
(Goodwill brought in by the new partner)

Premium for Goodwill A/c Dr. 48,00

To X’s Capital A/c
To Y’s Capital A/c
(Goodwill distributed among old partners in their sacrificing ratio)

Working Notes:

Let the total share = 1

1
Z is admitted for 4
th share

1 3
Remaining share = 1 − =
4 4

Old ratio of X and Y = 3 : 2

3 3 9
X's new share = × =
5 4 20

2 3 6
Y's share = × =
5 4 20

1 5
Z's share = or
4 20

New profit sharing ratio = 9 : 6 : 5

Sacrificing ratio of X and Y = 3 : 2


Note: When nothing has been specified about the new profit sharing ratio, it has been Share
assumed that the sacrificing ratio will be same as old ratio, i.e. 3 : 2.

Page No 3.93:

ANSWER:

Books of...
Journal
Debit
Date Particulars L.F. Amoun
Rs
Bank A/c Dr. 10,000
To Premium for Goodwill A/c
(Goodwill brought in by the new partner)

Premium for Goodwill A/c Dr. 10,000

1
F’s Capital A/c (40, 000 × 20
) Dr. 2,000
6
To E’s Capital A/c (40, 000 × 20
)

(Goodwill distributed among old partners in their sacrificing ratio)

Working Notes

Sacrificing ratio = Old ratio – New ratio

Old ratio between E and F = 4 : 1

New ratio between E, F and G = 2 : 1 : 1

4 2 6
Sacrifice made by E = − =
5 4 20

1 1 1
Sacrifice made by F = − = − (gain)
5 4 20

Value of Firm’s Goodwill = 10,000 × 4 = Rs 40,000

Page No 3.93:


Share
ANSWER:

Books of...
Journal
https://www.meritnation.com/icse-class-12-commerce/accountancy/double-entry-book-keeping-ts-grewal-2017/admission-of-a-partner/textbook-s… 133/183
7/4/2020 Double Entry Book Keeping Ts Grewal 2017 for Class 12 Commerce Accountancy Chapter 3 - Admission Of A Partner

Debit
Date Particulars L.F. Amoun
Rs
Bank A/c Dr. 1,10,000
To Premium for Goodwill A/c
To Z’s Capital A/c
(Capital and goodwill brought in by the new partner)

Premium for Goodwill A/c Dr. 30,000

To X’s Capital A/c
To Y’s Capital A/c
(Goodwill distributed among old partners in their sacrificing ratio)

Partners’ Capital Accounts

Dr. Cr.
Particulars X Y Z Particulars X Y Z
Balance c/d 2,10,000 1,20,000 80,000 Balance b/d 2,00,000 1,00,000
Bank A/c 80,000
Premium for
Goodwill 10,000 20,000
A/c

2,10,000 1,20,000 80,000 2,10,000 1,20,000 80,000

Working Notes:

Old ratio = 2 : 1

1
Z is admitted for 5
th share

New ratio = 3 : 1 : 1

Sacrificing ratio = Old ratio – New Ratio


Share

2 3 1
Sacrifice made by X = − =
3 5 15

1 1 2
Sacrifice made by Y = − =
3 5 15

Sacrificing ratio = 1 : 2

Page No 3.93:

ANSWER:

Books of…
Journal
Debit
Date Particulars L.F. Amoun
Rs
Bank A/c Dr. 91,500
3
To Premium for Goodwill A/c (84, 000 × 8
)

To Samir’s Capital A/c

(Capital and goodwill brought in by the new partner)

Premium for Goodwill A/c Dr. 31,500

5
Satish’s Capital A/c (84, 000 × 56
) Dr. 7,500
26
To Sushil’s Capital A/c (84, 000 × 56
)

(Goodwill distributed among old partners in their sacrificing ratio)

Partners’ Capital Accounts

Dr.
Particulars Sushil Satish Samir Particulars Sushil Satish

Sushil’s Capital A/c 7,500 Balance b/d 48,000 42,000

Balance c/d 87,000 34,500 60,000 Bank A/c
Premium for Goodwill A/c 31,500
Satish’s Capital A/c 7,500 
Share
87,000 42,000 60,000 87,000 42,000

Balance Sheet
as on April 01, 2017 after Samir’s admission
Amount Amount
Liabilities Assets
Rs Rs
Bank Loan 23,000 Bank 97,500
Creditors 55,000 Stock 12,000
Capital A/cs: Plant & Machinery 30,000
Sushil 87,000 Debtors 18,300
Less : Provision for
Satish 34,500 300 18,000
Doubtful Debts
Samir 60,000 1,81,500 Building 1,02,000
2,59,500 2,59,500

Working Notes:

Old ratio = 5 : 2

New ratio = 2 : 3 : 3

Sacrificing ratio = Old ratio – New ratio

5 2 26
Sacrifice made by Sushil = − =
7 8 56

2 3 5
Sacrifice made by Satish = − = − (gain)
7 8 56

Bank Account
Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs

Balance b/d 6,000 Balance c/d 97,500

Premium for Goodwill A/c 31,500
Samir’s Capital A/c 60,000
97,500 97,500

Share

Page No 3.94:

ANSWER:

C is admitted for share

Let the combined share of A, B and C be = 1

Combined share of A and B after C’s admission = 1 − C’s share

New Ratio = Old Ratio × Combined share of A and B

Distribution of C’s share of Goodwill

C’s share of Goodwill = Rs 14,000


Share

Page No 3.94:

ANSWER:

Journal Entries

Debit Credit

Date Particulars L.F. Amount Amount

Rs Rs

A’s Capital A/c Dr. 1,800

B’s Capital A/c Dr. 1,200

To Goodwill A/c 3,000

(Goodwill written-off)

Cash A/c Dr. 40,000

To C’s Capital A/c Dr. 30,000

To Premium for Goodwill A/c 10,000

(C brought capital and his share of goodwill in cash)

Premium for Goodwill Dr. 10,000

To A’s Capital A/c 5,000


To B’s Capital A/c Share
5,000

(Premium for Goodwill distributed)

Sacrificing Ratio = Old Ratio − New Ratio

Distribution of Premium for Goodwill C’s share of Goodwill)

Goodwill written-off

Page No 3.94:

ANSWER:

Debit Credit

Date Particulars L.F. Amount Amount

Rs Rs 
Share
Cash A/c Dr. 21,000

To Premium for Goodwill A/c 21,000

(C brought Premium for Goodwill)

Premium for Goodwill A/c Dr. 21,000

To A’s Capital A/c 9,000

To B’s Capital A/c 12,000

(Premium for Goodwill brought by C distributed

between A and B in sacrificing ratio i.e. 3:4)

C’s share = A’s sacrifice + B’s sacrifice

New Ratio is 12:6:7

C’s will bring Premium for Goodwill


Share

Distribution of Premium for Goodwill-

Page No 3.94:

ANSWER:

Journal

Debit Credit

Date Particulars L.F. Amount Amount

Rs Rs

Stock A/c Dr. 60,000

Debtors A/c Dr. 80,000

Land A/c Dr. 1,00,000

Plant and Machinery A/c Dr. 40,000

To Z’s Capital A/c 1,30,000

To Premium for Goodwill A/c 1,50,000

(Z brought assets for his share of goodwill and

Capital)

Premium for Goodwill A/c Dr. 1,50,000

To X’s Capital A/c 90,000

To Y’s Capital A/c 60,000

(Z’s share of Goodwill distributed between X and Y

in sacrificing ratio)

Share

Working Notes:

WN1

WN2

Distribution of Z’s Goodwill

Page No 3.94:

ANSWER:

Books of...
Journal
Debit
Date Particulars L.F. Amoun
Rs
Bank A/c Dr. 2,36,000
To Premium for Goodwill A/c
To Amit’s Capital A/c
(Capital and goodwill brought in by the new partner)

Premium for Goodwill A/c Dr. 36,000

To Sachin’s Current A/c
To Kapil’s Current A/c
(Goodwill distributed among old partners in their sacrificing ratio)

Sachin’s Current A/c Dr. 3,600

Kapil’s Current A/c Dr. 32,400
To Bank A/c
(Goodwill withdrawn by the old partners)

Share

Working Notes

Old ratio = 2 : 3

New ratio = 3 : 3 : 2

Sacrificing ratio = Old ratio − New ratio

2 3 1
Sacrifice made by Sachin = − =
5 8 40

3 3 9
Sacrifice made by Kapil = − =
5 8 40

Sacrificing ratio = 1 : 9

Page No 3.94:

ANSWER:

Journal

Debit Credit

Date Particulars L.F. Amount Amount

Rs Rs

Cash A/c Dr. 13,000

To C’s Capital A/c 10,000

To Premium for Goodwill A/c 3,000

(C brought capital and Premium for Goodwill)

Premium for Goodwill A/c Dr. 3,000

To A’s Capital A/c 3,000

(Premium for Goodwill transferred to A’s Capital)

A’s Capital A/c Dr. 3,000

To Cash A/c 3,000


(Premium for Goodwill withdrawn) Share

Working Notes:

Calculation of Sacrificing Ratio

Here only A is sacrificing his share of profit in favour of C. Hence, A will get the whole amount of
premium for goodwill.

Page No 3.94:

ANSWER:

Journal

Debit Credit

Date Particulars L.F. Amount Amoun

Rs Rs

Cash A/c Dr. 24,000

To Shyam’s Capital A/c 15,0

To Premium for Goodwill A/c 9,0

(Shyam brought capital and his

share of goodwill

in cash)

Premium for Dr. 9,000

Goodwill A/c

To Prabhu’s Capital A/c Share
4,5

To Sat Kumar’s Capital A/c 4,5

(Goodwill brought by Shyam

di t ib t d b t P bh d
https://www.meritnation.com/icse-class-12-commerce/accountancy/double-entry-book-keeping-ts-grewal-2017/admission-of-a-partner/textbook-s… 144/183
7/4/2020 Double Entry Book Keeping Ts Grewal 2017 for Class 12 Commerce Accountancy Chapter 3 - Admission Of A Partner
distributed between Prabhu and
Sat Kumar i.e. 1:1)

Prabhu’s Dr. 4,500

Capital A/c

Sat Kumar’s Dr. 4,500

Capital A/c

To Cash 9,0
A/c

(Amount of
Premium for
Goodwill
withdrawn
by Prabhu
and Sat
Kumar’s)

Calculation of Future (New) Profit Sharing Ratio

Shyam admitted for share of profit

Let combined share of all partners after Shyam’s admission = 1

Combined share Phrabhu and Sat Kumar after Shyam’s admission


Share

Page No 3.94:

ANSWER:

Books of ….
Journal
Deb
Date Particulars L.F. Amou
Rs
Bank A/c (60% of 25,000) Dr. 15,0
To Premium for Goodwill A/c
(Goodwill brought in by the new partner)

Premium for Goodwill A/c Dr. 15,0

To A’s Capital A/c
To B’s Capital A/c
(Goodwill distributed in among old partners in their sacrificing ratio)

C’s Current A/c (40% of 25,000) Dr. 10,0

To A’s Capital A/c
To B’s Capital A/c
(Amount of goodwill not brought by new partner debited from current
account and distributed among old partners in their sacrificing ratio)

Working Notes

Old ratio = 3 : 2

Share

3 1 13 26
A's new share = − = or
5 6 30 60

2 1 19
B's new share = − =
5 12 60

1 15
C's new share = or
4 60

New profit sharing ratio = 26 : 19 : 15

Sacrificing ratio = Old ratio − New ratio

3 26 10
Sacrifice made by A = − =
5 60 60

2 19 5
Sacrifice made by B = − =
5 60 60

Sacrificing ratio = 10 : 5 or 2 : 1

Page No 3.95:

ANSWER:

Journal

Debit Credit
Date Particulars L.F. Amount Amount
Rs Rs

Cash A/c Dr. 10,000

To Premium for Goodwill A/c 10,000

(C brought premium for

Goodwill)

Premium for 
Dr. 10,000
Goodwill A/c Share

To A’s Capital A/c 6,667

To B’s Capital A/c 3,333

(Premium for Goodwill

distributed in sacrificing
Ratio)

C’s Current
Dr. 6,000
A/c

To A’s
4,000
Capital

To B’s Capital 2,000

(Out of the share of goodwill

Rs 6,000 not brought by C,
and charged from his capital
account and distributed)

Working Notes:
WN1

WN2
Distribution of Premium for Goodwill

WN3
Distribution of Goodwill charged from C’s Capital Account


Share

Page No 3.95:

ANSWER:

Books of ….
Journal
Debit Credit
Date Particulars L.F. Amount Amount
Rs Rs
Bank A/c Dr. 80,000
To C’s Capital A/c 80,000
(Capital brought in by new
partner)

1
C’s Current A/c (60, 000 × 8
) Dr. 7,500
To A’s Capital A/c 3,750
To B’s Capital A/c 3,750
(Amount of goodwill not brought by new partner
debited from his current account and distributed
among old partners in their sacrificing ratio)

Working Notes

Old ratio = 5 : 3

New ratio = 9 : 5 : 2

5 9 1
Sacrifice made by A = − =
8 16 16

3 5 1
Sacrifice made by B = − =
8 16 16

Sacrificing ratio = 1 : 1

Page No 3.95:

ANSWER: 
Share

Books of ….
Journal
Debit Credi
https://www.meritnation.com/icse-class-12-commerce/accountancy/double-entry-book-keeping-ts-grewal-2017/admission-of-a-partner/textbook-s… 149/183
7/4/2020 Double Entry Book Keeping Ts Grewal 2017 for Class 12 Commerce Accountancy Chapter 3 - Admission Of A Partner
Debit Credi
Date Particulars L.F. Amount Amoun
Rs Rs
Bank A/c Dr. 3,30,000
To D’s Capital A/c 1,20,00
To E’s Capital A/c 1,20,00
To Premium for Goodwill A/c 90,00
(Capital and goodwill brought in by the new partners)

E’s Current A/c Dr. 45,000

4
C’s Capital A/c (5, 40, 000 × 60
) Dr. 36,000
Premium for Goodwill A/c Dr. 90,000
To A’s Capital A/c 1,35,00
To B’s Capital A/c 36,00
(Amount of goodwill not brought by new partners
debited from their capital account and distributed
among old partners in their sacrificing ratio)

Working Notes

Old ratio = 5 : 4 : 1

New ratio = 3 : 4 : 2 : 2 : 1

Sacrificing ratio = Old ratio – New ratio

5 3 15
Sacrifice made by A = − =
10 12 60

4 4 4
Sacrifice made by B = − =
10 12 60

1 2 4
Sacrifice made by C = − = − (gain)
10 12 60

Sacrificing ratio = 15 : 4

Value of Firm 's Goodwill = D's Share of Goodwill × Reciprocal of his Profit

12
Value of Firm 's Goodwill = 90, 000 × = Rs 5, 40, 000
2

Share

Page No 3.95:

ANSWER:

Books of ….
Journal
Debit Credit
Date Particulars L.F. Amount Amount
Rs Rs
Bank A/c Dr. 80,000
To Z’s Capital A/c 80,000
(Capital brought in by new partner)

Z’s Current A/c Dr. 20,000

To X’s Capital A/c 10,000
To Y’s Capital A/c 10,000
(Amount of goodwill not brought by new
partner debited from his capital account and
distributed among old partners in their
sacrificing ratio)

Since, nothing has been specified about the new profit sharing ratio, thus, it has been
assumed that sacrificing ratio is same as old ratio, i.e. 1 : 1.

Working Notes

Total capital of the new firm = Capital of incoming partner × Reciprocal o

5
Total capital of the new firm = 80, 000 × = 4, 00, 000
1

Combined Capital of X, Y and Z = 1, 30, 000 + 90, 000 + 80, 000 = 3, 00, 000

Value of Firm 's Goodwill = 4, 00, 000 − 3, 00, 000 = 1, 00, 000

1
Z's Share in Goodwill = 1, 00, 000 × = 20, 000
5

Page No 3.95:


ANSWER: Share

Books of ….
Journal

Date Particulars L.F. Debit Credit

Amount Amount
Rs Rs
C’s
Current Dr. 10,000
A/c
To A’s
Capital 6,000
A/c
To B’s
Capital 4,000
A/c
(Amount of goodwill
not brought by new
partner debited from
his capital account
and distributed
among old partners
in their sacrificing
ratio.)

Since, nothing has been specified about new profit sharing ratio, it is assumed that sacrificing
ratio is same as the old ratio.

Working Notes

Total capital of the new firm = Capital of incoming partner × Reciprocal of

4
Total capital of the firm = 50, 000 × = 2, 00, 000
1

Capital of A, B and C = A' Capital A/c + B's Capital A/c + C's Capital A/c +

Advertisement expenditure

= 30, 000 + 20, 000 + 50, 000 + 50, 000 + 11, 000 − 1, 000

Goodwill of the firm = 2, 00, 000 − 1, 60, 000 = Rs 40, 000

1
C's Share in Goodwill = 40, 000 × = 10, 000
4

Page No 3.95:

Share

ANSWER:

Total Capital of the firm after Z’s admission = X’s Capital + Y’s Capital + Undistributed Profit +
Z’s Capital

Total Capital of the firm after Z’s admission = 50,000 + 50,000 + 40,000 + 80,000

Total Capital of the firm after Z’s admission = Rs 2,20,000

1
Share of Goodwill of Z: Rs 25,000 (1, 00, 000 × 4
)

Z’s Current A/c Dr. 25,000

To X’s Capital A/c 12,500
To Y’s Capital A/c 12,500

Page No 3.95:

ANSWER:

Capital of X & Y = Assets − Outside Liabilities

= 13,50,000 − 2,50,000 = Rs 11,00,0000

So, Total Capital of the Firm = 11,00,000 + 5,00,000 = Rs 16,00,000

4
But as per Z's Share, Total Capital should be 5,00,000 × = Rs 20,00,000
1

So, Amount of Hidden Goodwill = 20,00,000− 16,00,000 = Rs. 4,00,000

1
∴ Z's Share of Goodwill = 4,00,000 × = Rs 1,00,000
4

Page No 3.95:

ANSWER:

Share

Existing Capital of the Firm = 1,30,000 + 90,000 + 80,000 = Rs 3,00,000

5
But as per Z's Share, Total Capital should be 80,000 × = Rs 4,00,000
1

So Amount of Hidden Goodwill 4 00 000 3 00 000 Rs 1 00 000

1
∴ Z's Share of Goodwill =1,00,000 × = Rs 20,000
5

Journal

Debit Credit
Date Particulars L.F. Amount Amount
(Rs) (Rs)

Bank A/c Dr. 1,00,000

To Z’s Capital A/c 80,000

To Premium for Goodwill A/c 20,000

(Capital and Goodwill brought in cash)

Premium for Goodwill A/c Dr. 20,000

To X’s Capital A/c 10,000
To Y’s Capital A/c 10,000

(Goodwill distributed among old partners)

Page No 3.95:

ANSWER:

Books of ….
Journal
Debit Credit
Date Particulars L.F. Amount Amount
Rs Rs
Cash A/c Dr. 50,000

To Premium for Goodwill A/c 50,000
Share

(Goodwill amount brought in by new partner)

Premium for Goodwill A/c Dr 50 000

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Premium for Goodwill A/c Dr. 50,000
C’s Current A/c Dr. 40,000
To A’s Capital A/c 45,000
To B’s Capital A/c 45,000
(Amount of goodwill not brought by new partner
debited from his capital account and distributed
among old partners in their sacrificing ratio)

A’s Capital A/c Dr. 80,000

B’s Capital A/c Dr. 80,000
To Goodwill A/c 1,60,000
(Goodwill written-off between old partners)

Note: Since no information about new ratio is given, it is assumed that old partners will
sacrifice in their old ratio.

Page No 3.96:

ANSWER:

Books of ….
Journal
Debit C
Date Particulars L.F. Amount Am
Rs
Bank A/c Dr. 39,600
To C’s Capital A/c 3
To Premium for Goodwill A/c
(Capital and goodwill brought in by the new partner)

Premium for Goodwill A/c Dr. 9,600

To A’s Capital A/c 
Share
To B’s Capital A/c
(Goodwill distributed among old partners in their sacrificing ratio)

A’s Capital A/c Dr 3 000

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A s Capital A/c Dr. 3,000
B’s Capital A/c Dr. 1,000
To Goodwill A/c
(Goodwill written off between old partners)

Working Notes

WN 1: Calculation of Sacrificing Ratio

Old ratio = 3 : 1

New ratio = 3 : 1 : 1

Sacrificing ratio = Old ratio − New ratio

3 3 3
Sacrifice made by A = − =
4 5 20

1 1 1
Sacrifice made by B = − =
4 5 20

Sacrificing ratio = 3 : 1

WN 2: Calculation of Goodwill

Total Profit = 15,000 + 12,000 + 18,000 + 19,000 = 64,000

Total Profit
Average Profit for 4 years =
4

64,000
Average Profit = = 16, 000
4

Goodwill = Average profit for 4 years × Numbers of Years’ purchase

Goodwill = 16,000 × 3 = 48,000

1
C’s Share of goodwill = × 48, 000 = 9, 600
5

Page No 3.96:

ANSWER: 
Share

Books of ….
Journal
Debit
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Debit
Date Particulars L.F. Amount
Rs
Bank A/c Dr. 50,000
To W’s Capital A/c
(Capital amount brought in by new partner)

W’s Current A/c Dr. 15,000

To X’s Capital A/c
To Y’s Capital A/c
To Z’s Capital A/c
(Amount of goodwill not brought by new partner debited
from his capital account and distributed in old partners in
their sacrificing ratio.)

X’s Capital A/c Dr. 10,000

Y’s Capital A/c Dr. 20,000
Z’s Capital A/c Dr. 30,000
To Goodwill A/c
(Old goodwill written off among old partners in their old ratio)

Working Notes

Goodwill = Average profit for 3 years

Total Profit = 62,500 + 70,000 + 92,500 = 2,25,000

Total Profit for 3 Years

Average Profit =
3

2,25,000
Average Profit = = 75, 000
3

Goodwill = Rs 75,000

1
W's Share of goodwill = 75, 000 × = 15, 000
5


Note: As no information about new profit sharing ratio is given, it is assumed that old ratioShare
is
the sacrificing ratio. Since Z is not bringing any goodwill, his Current A/c will be debited.

Page No 3.96:

ANSWER:

Books of ….
Journal
Debit Credit
Date Particulars L.F. Amount Amount
Rs Rs
Bank A/c Dr. 5,15,200
To B’s Capital A/c 4,81,600
To Premium for Goodwill A/c 33,600
(Capital and goodwill brought in by new partner)

Premium for Goodwill A/c Dr. 33,600

To A’s Capital A/c 33,600
(Goodwill given to A brought in by B)

Working Notes

Goodwill = Average Profit for 5 Years’ × Numbers of Years’ Purchase

Total Profit
Average Profit =
5

Total Profit = (8,000) + 20,800 + 27,200 + 32,000 + 40,000 = 1,12,000

1,12,000
Average Profit = = 22, 400
5

Goodwill = 22, 400 × 3 = 67, 200

1
B's share of Goodwill = 67, 200 × = 33, 600
2

Calculation of A’s Capital

= Opening Balance of his Capital + 5 Years’ Profit+ A’s Share of Goodwill – Drawings

= 4,00,000 + 1,12,000 + 33,600 – 64,000= 4,81,600 

Page No 3.96:

ANSWER:

(i)

Books of ….
Journal
Debit C
Date Particulars L.F. Amount Am
Rs
Bank A/c Dr. 20,000
To Premium for Goodwill A/c 2
(Goodwill brought in by new partner in cash)

Premium for Goodwill A/c Dr. 20,000

To A’s Capital A/c 1
To B’s Capital A/c
(Goodwill distributed among old partners in their sacrificing ratio)

A’s Capital A/c Dr. 24,000

B’s Capital A/c Dr. 16,000
To Goodwill A/c 4
(Old Goodwill written off among old partners in their old ratio)

Working Notes

Old ratio = 3 : 2

New ratio = 3 : 3 : 2

Sacrificing ratio = Old ratio – New ratio

3 3 9
Sacrifice made by A = − =
5 8 40

2 3 1
Sacrifice made by B = − =
5 8 40

Sacrificing ratio = 9 : 1 
Share
(ii)
Books of ….
Journal
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Date Particulars L.F. Debit C

Amount Am

Rs
Bank A/c Dr. 1,000
To Premium for Goodwill A/c
(Goodwill brought in by new partner in cash)

Premium for Goodwill A/c Dr. 1,000

C’s Current A/c Dr. 1,000
To A’s Capital A/c
To B’s Capital A/c
(Goodwill distributed among old partners in their sacrificing ratio)

A’s Capital A/c Dr. 3,000

B’s Capital A/c Dr. 3,000
To Goodwill A/c
(Old Goodwill written off among old partners in their old ratio)

Page No 3.96:

ANSWER:

WN1: Calculation of Rao’s share of Goodwill

1
Rao 's Share of Goodwill = 30, 000 × = 7, 500
4

WN2: Adjustment of Rao’s share of Goodwill

3
Murty will get = 7, 500 × = 4, 500
5

2
Rao will get = 7, 500 × = 3, 000
5

(a) Where there is no Goodwill Account

Journal

Debit Credit
Share

Date Particulars L.F. Amount Amoun

Rs Rs

Rao’s Capital Dr. 7,500

A/c

To Murty’s Capital A/c 4,5

To Shah’s Capital A/c 3,0

(Rao’s share of goodwill

charged from his capital
account and distributed
between Murty and Shah in
sacrificing ratio i.e., 3:2)

(b) Goodwill appears at Rs 10,000

Journal

Debit

Date Particulars L.F. Amount A

Murty’s Dr. 6,000

Capital A/c

Shah’s Capital Dr. 4,000

A/c

To Goodwill A/c

(Goodwill written-off at the time

of Rao’s admission in old ratio)

Rao’s Capital Dr. 7,500

A/c

To Murty’s Capital A/c

To Shah’s Capital A/c 

Share
(Rao’s share of goodwill charged
from his Capital Account and
distributed between Murty and
Shah in sacrificing ratio i.e., 3:2)
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Page No 3.96:

ANSWER:

Journal

Debit Credit
Date Particulars L.F. Amount Amount
(Rs) (Rs)

Bank A/c Dr. 11,20,000

To Z’s Capital A/c 10,00,000
To Premium for Goodwill A/c 1,20,000
(Capital and Goodwill brought in cash)

Premium for Goodwill A/c Dr. 1,20,000

Y’s Capital A/c Dr. 40,000
To X’s Capital A/c 1,60,000
(Goodwill distributed among Sacrificing
Partners’)

X’s Capital A/c Dr 40,000

Y’s Capital A/c Dr. 20,000
To Goodwill A/c 60,000
(Existing Goodwill written off) 
Share

Partners’ Capital Accounts

Dr.

Particulars X Y Z Particulars X Y

Goodwill 40,000 20,000 Balance b/d 10,00,000 4,00,000

A/c
X’s Capital 40,000 Bank
A/c
Balance c/d 11,20,000 3,40,000 10,00,000 Y’s Capital 1,20,000
A/c
Premium 40,000
for
Goodwill
A/c

11,60,000 4,00,000 10,00,000 11,60,000 4,00,000

Balance Sheet

Amount Amount
Liabilities Assets
Rs Rs

Creditors 1,20,000 Furniture 40,000

Bills Payable 80,000 Machinery 4,20,000

Capital Building 4,80,000

X 11,20,000 Debtors 3,60,000

Y 3,40,000 Bank 13,60,000

Z 10,00,000 24,60,000 (2,40,000+10,00,000+1,20,000)

26,60,000 
26,60,000Share

Working Notes:

Calculation of Sacrificing Ratio:

2 2 4
X= − =
3 5 15
1 2 1
Y= − = − (Gain)
3 5 15

1
Z's Share of Goodwill = 6,00,000 × = Rs 1,20,000
5

1
Y's Share of Goodwill = 6,00,000 × = Rs 40,000
15

Page No 3.97:

ANSWER:

Books of ….
Journal
Debit Credit
Date Particulars L.F. Amount Amount
Rs Rs
Revaluation A/c Dr. 16,000
To Machinery A/c 16,000
(Machinery value has reduced)

Building A/c Dr. 40,000

To Revaluation A/c 40,000
(Building account appreciated)

Revaluation A/c Dr. 4,000

To Provision for Doubtful Debts A/c 4,000
(Provision created against debtors)

Revaluation A/c Dr. 12,000

To Provision for Warranty Claims A/c 12,000
(Created provision against warranty claims)

Share

Page No 3.97:

ANSWER:

Books of ….
Journal
Debit Credit
Date Particulars L.F. Amount Amoun
Rs Rs
Investments A/c Dr. 20,000
To Revaluation A/c 20,00
(Investment value increased due to unrecorded investment)

Revaluation A/c Dr. 5,000

To Creditors A/c 5,00
(Creditors increased by 5,000 due to unrecorded liability)

Sundry Creditors A/c Dr. 1,600

To Revaluation A/c 1,60
(Liability for creditors reduced to the extent of 1,600)

Page No 3.97:

ANSWER:

Journal

Debit Credit
Date Particulars L.F. Amount Amount
(Rs) (Rs)

(i) Provision for Doubtful Debts A/c Dr. 5,000

To Revaluation A/c 5,000

(Provision on Debtors reduced) Share

(ii) Revaluation A/c Dr. 5,000

To X’s Capital A/c 3,000

To Y’s Capital A/c 2,000
(Profit on Revaluation transferred to
Partners’ Capital A/c)

Page No 3.97:

ANSWER:

Journal

Debit Credit

Date Particulars L.F. Amount Amount

Rs Rs

Creditors A/c Dr. 5,000

Building A/c Dr. 40,000

Investments A/c Dr. 15,000

To Revaluation A/c 60,000

(Increase in assets and decrease in liabilities

transferred to Revaluation Account)

Revaluation A/c Dr. 10,000

To Provision for Doubtful Debts A/c 5,000

To Reserve for outstanding Repairs Bill A/c 2,000

To Creditors A/c 3,000

(Increase in liabilities and creation of reserves and 

provisions transferred to Revaluation Account) Share

Revaluation A/c Dr. 50,000

To Old Partners’ Capital A/c 50,000

(Profit on Revaluation transferred to Partners’

Capital)

Page No 3.97:

ANSWER:

Journal

Debit Credit
Date Particulars L.F. Amount Amount
(Rs) (Rs)

Revaluation A/c Dr. 76,000

To Stock A/c 40,000
To Furniture A/c 36,000
(Value of assets decreased)

X’s Capital A/c Dr. 45,600

Y’s Capital A/c Dr. 30,400
To Revaluation A/c 76,000
(Loss on Revaluation transferred to
Partners’ Capital A/c)


Share
Page No 3.97:

ANSWER:
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7/4/2020 Double Entry Book Keeping Ts Grewal 2017 for Class 12 Commerce Accountancy Chapter 3 - Admission Of A Partner

Journal

Debit Credit
Date Particulars L.F. Amount Amount
(Rs) (Rs)

X’s Capital A/c Dr. 24,000

Y’s Capital A/c Dr. 16,000
To Investments A/c 40,000
(Half of the investments taken over by X
and Y)

Investment A/c Dr. 10,000

To Revaluation A/c 10,000
(Value of investments increased)

Revaluation A/c Dr. 10,000

To X’s Capital A/c 6,000
To Y’s Capital A/c 4,000
(Profit on revaluation transferred to
Partners’ Capital A/c)

Page No 3.97:

ANSWER:

Journal

Date Particulars L.F. Debit Credit
Share

Amount Amount
(Rs) (Rs)
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Bad Debts A/c Dr. 6,000

To Debtors A/c 6,000
(Bad debts incurred)

Provision for Doubtful Debts A/c Dr 6,000

To Bad Debts A/c 6,000
(Bad debts adjusted)

Revaluation A/c (WN 1) Dr. 1,500

To Provision for Doubtful Debts A/c 1,500
(Provision created)

X’s Capital A/c Dr. 900

Y’s Capital A/c Dr. 600
To Revaluation A/c 1,500
(Loss on revaluation transferred to Partners’
Capital A/c)

Working Notes:

WN1: Calculation of Provision for Doubtful Debts

5
Provision to be created = (76,000 - 6,000) × = Rs 3,500
100

Old Provision = Rs 2,000

New Provision to be created = 3,500 - 2,000 = 1,500

Page No 3.97:


ANSWER: Share

Journal

Debit Credit
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Date Particulars L.F. Amount Amount

(Rs) (Rs)

Z’s Capital A/c Dr. 7,000

W’s Capital A/c Dr. 3,500
To X’s Capital A/c 10,500
(Adjustment entry made)

Working Notes:
WN 1: Gain/Loss on Revaluation

Gain/Loss = Land & Building + Trade Creditors − Plant & Machinery − Outstanding Expenses
Gain/Loss = 50,000 + 10,000 − 10,000 − 15,000 = 35,000

WN2: Calculation of Sacrifice or Gain

X :Y : Z = 6:3:1 (Old Ratio)

X :Y :Z :W = 3:3:3:1 (New Ratio)

Sacrificing (or Gaining) ratio = Old Ratio - New Ratio

6 3 6−3 3
X's share = − = = (Sacrifice)
10 10 10 10

3 3 3−3
Y's share = − = = 0
10 10 10

1 3 1−3 2
Z's share = − = = − (Gain)
10 10 10 10

1
W's share = (Gain)
10

WN 3: Adjustment of Revaluation Profit

3
Amount credited in X's Capital A/c = 35,000 × = Rs 10,500
10

2
Amount debited in Z's Capital A/c = 35,000 × = Rs 7,000
10

1
Amount debited in W's Capital A/c = 35,000 × = Rs 3,500
10


Page No 3.98: Share

ANSWER:

Journal

Debit Credit

Date Particulars L.F. Amount Amount

Rs Rs

Profit and Loss Adjustment A/c Dr. 1,750

To Stock A/c 500

To Plant and Machinery A/c 875

To Reserve for Doubtful Debts A/c 375

(Decrease in stock and Plant and creation of Reserve

for Doubtful Debt transferred to Profit and Loss
Adjustment Account)

Building A/c Dr. 2,500

To Profit and Loss Adjustment A/c 2,500

(Increase in value of Building of transferred to Profit

and loss Adjustment Accounts)

Profit and Loss Adjustment A/c 750

To A’s Capital A/c 500

To B’s Capital A/c 250

(Profit on revaluation of asset and liabilities

distributed between A and B in their old ratio)

Cash A/c Dr. 10,500

To C’s Capital A/c 7,500

To Premium for Goodwill A/c 3,000


(C brought capital and share of goodwill) Share

Premium for Goodwill A/c Dr. 3,000

To A’s Capital A/c 2,000

To B’s Capital A/c 1,000

(Premium for Goodwill distributed between A and B

in their sacrificing ratio i.e 2:1)

Profit and Loss Adjustment Account

Dr. Cr.

Amount Amount
Particulars Particulars
Rs Rs

Stock 500

Plant and Machinery 875 Building 2,500

Reserve for Doubtful Debts 375

Profit transferred to

A Capital 500

B Capital 250

2,500 2,500

Partners’ Capital Accounts

Dr. Cr.

Particulars A B C Particulars A B C

Balance b/d 15,000 10,000

Cash 7,500
Share
Premium for 2,000 1,000
Goodwill

Balance c/d 17,500 11,250 7,500 Profit and 500 250

Loss
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oss
Adjustment
(Profit)

17,500 11,250 7,500 17,500 11,250 7,500

Balance Sheet

as on March 31, 2016 after admission of C

Amount Amounts
Liabilities Assets
Rs Rs

Capital Accounts: Building (25,000 + 2,500) 27,500

A 17,500 Plant and Machinery (17,500 – 16,625

875)

B 11,250 Stock (10,000 – 500) 9,500

C 7,500 36,250

Sundry Creditors 32,950 Sundry Debtors 4,850

Less: Provision for D. 375 4,475

Debts

Cash in Hand (600 + 10,500) 11,100

69,200 69,200

Working Notes:

WN1


Share
WN2

Distribution of Premium for Goodwill (in sacrificing ratio)

WN3

Distribution of Profit from Profit and loss Adjustment Account (in old ratio)

Page No 3.98:

ANSWER:

Books of ….
Journal
Debit Credit
Date Particulars L.F. Amount Amount
Rs Rs
Bank A/c Dr. 2,50,000
To C’s Capital A/c 2,00,000
To Premium for Goodwill A/c 50,000
(Capital and Goodwill brought in by new partner)

Premium for Goodwill A/c Dr. 50,000

To A’s Capital A/c 25,000
To B’s Capital A/c 25,000
(Goodwill distributed among old partners in their
sacrificing ratio, i.e. 1 : 1)

A’s Capital A/c Dr. 25,000

B’s Capital A/c Dr. 25,000
To Cash A/c 50,000 
(Goodwill brought in by C is withdrawn by old Share
partners)

Revaluation A/c (10,000 – 5,000) Dr. 5,000

To Provision for Doubtful Debts 5,000

(Created provision against debtors)

Revaluation A/c Dr. 32,500

To Machinery A/c 20,000
To Furniture A/c 12,500
(Value of machinery and furniture has
depreciated)

Stock A/c Dr. 30,000

To Revaluation A/c 30,000
(Value of stock has reduced)

Building A/c Dr. 1,47,000

To Revaluation A/c 1,47,000
(Value of building has appreciated by 20%)

Investments A/c Dr. 20,000

To Revaluation A/c 20,000
(Value of investments has increased due to
unrecorded investments)

Revaluation A/c Dr. 1,59,500

To A’s Capital A/c 79,750
To B’s Capital A/c 79,750
(Revaluation profit distributed among old
partners in their old ratio)

Balance Sheet
as on March 31, 2017 after C’s admission
Amount Amount
Liabilities Assets
Rs Rs

Sundry Creditors 6,50,000 Sundry Debtors 2,00,000

Less: Provision for
Outstanding Expenses 30,000 10,000 1,90,000
Doubtful debts
Capital A/c: Stock 
2,30,000
Share
A 6,79,750 Furniture (1,00,000 – 12,500) 87,500
B 4,79,750 Investments 20,000
C 2,00,000 13,59,500 Machinery (1,80,000 – 20,000) 1,60,000
Building (7,35,000 + 1,47,000) 8,82,000
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u d g ( ,35,000 , ,000) 8,8 ,000
Cash at Bank 4,70,000
20,39,500 20,39,500

Working Notes
Partners’ Capital Accounts

Dr.
Particulars A B C Particulars A B

Bank A/c 25,000 25,000

Balance b/d 6,00,000 4,00,00
Bank A/c
Revaluation A/c 79,750 79,75
Balance c/d 6,79,750 4,79,750 2,00,000 Premium for Goodwill A/c 25,000 25,00

7,04,750 5,04,750 2,00,000 7,04,750 5,04,75

Cash at Bank Account

Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs

Balance b/d 2,70,000 A’s Capital A/c 25,000

C’s Capital A/c 2,00,000 B’s Capital A/c 25,000
Premium for Goodwill A/c 50,000 Balance c/d 4,70,000

5,20,000 5,20,000


Share
Page No 3.99:

ANSWER:

Revaluation Account
Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs

Stock A/c 6,250 Provision for Doubtful Debts A/c 18,750

Plant and Machinery A/c 21,250 Loss transferred to:
X’s Capital A/c 5,250
Y’s Capital A/c 3,500 8,750
27,500 27,500

Cash at Bank Account

Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs

Balance b/d 1,50,000 Balance c/d 4,89,250

Premium for Goodwill A/c 89,250
Samir’s Capital A/c 2,50,000
4,89,250 4,89,250

Partners’ Capital Accounts

Dr.
Particulars X Y Z Particulars X

Revaluation A/c 5,250 3,500 Balance b/d 3,75,000 1,8

Bank A/c
Balance c/d 4,14,375 2,28,625 2,50,000 Premium for Goodwill A/c 44,625 4


4,19,625 2,32,125 2,50,000 4,19,625Share
2,3

Balance Sheet
as on April 01, 2017 after Z’s admission
Amount Amount
Liabilities Assets
Rs Rs

Sundry Creditors 1,87,500 Debtors 2,50,000

Less: Provision for
Bills Payable 1,00,000 6,250 2,43,750
Doubtful Debts
Outstanding Rent 25,000 Stock (62,500 – 6,250) 56,250
Plant and Machinery (4,25,000
Capital A/cs: 4,03,750
– 21,250)
X 4,14,375 Prepaid Expenses 12,500
Y 2,28,625 Cash at Bank 4,89,250
Z 2,50,000 8,93,000
12,05,500 12,05,500

Working Notes

WN 1:Calculation of Sacrificing Ratio

Old ratio = 3 : 2

New profit sharing ratio = 5 : 3 : 2

Sacrificing ratio = Old ratio − New ratio

3 5 1
Sacrifice made by X = − =
5 10 10

2 3 1
Sacrifice made by Y = − =
5 10 10

Sacrificing ratio = 1 : 1

WN 2:Calculation of Hidden Goodwill

2
Z brings 2, 50, 000 as his capital for share in profits
10

10
Total Capital of the New Firm = 2, 50, 000 × = Rs 12, 50, 000
2

Capital at the time of Z's admission = X's Capital A/c + Y's Capital A/c + Z'

= 3, 75, 000 + 1, 87, 500 + 2, 50, 000 − 8, 75


Share
Goodwill of the Firm = 12, 50, 000 − 8, 03, 750 = 4, 46, 250

2
Z's Share of Goodwill = 4, 46, 250 × = 89, 250
10

Page No 3.99:

ANSWER:

Revaluation Account

Amount Amount
Particulars Particulars
Rs Rs

Provision for Damages 1,500 Land and 6,0

Building

Outstanding Electricity Bill 300 (30,000 × 20%)

Stock 2,000 Creditors 1,2

(unclaimed)

Furniture 1,000

Reserve for Doubtful Debts 750

(15,000 × 5%)

Profit transferred to Capital Accounts

M 1,100

S 550 1,650

7,200 7,2

Partners’ Capital Accounts

Dr. Cr.

Particulars M S R Particulars M S R

Bank 2,000 1,000 Balance b/d 30,000 20,000

(Goodwill 
withdrawn) Share

Bank 15,000

Premium 4,000 2,000

Goodwill
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7/4/2020 Double Entry Book Keeping Ts Grewal 2017 for Class 12 Commerce Accountancy Chapter 3 - Admission Of A Partner
Goodwill

Balance c/d 33,100 21,550 15,000 Revaluation 1,100 550

(profit)

35,100 22,550 15,000 35,100 22,550 15,000

Balance Sheet

as on April 01, 2017 after R’s admission

Amount Amount
Liabilities Assets
Rs Rs

Provision for Damages 1,500 Cash at Bank (17,000 + 21,000 – 35,000

3,000)

Outstanding Electricity Bill 300 Stock (25,000 –2,000) 23,000

Sundry Creditors (44,000 – 42,800 Furniture and Fixtures (3,000 – 2,000

1,200) 1,000)

Capital A/cs: Sundry Debtors 15,000

M 33,100 Less: 5% Reserve for 750 14,250

D. Debts

S 21,550 Bills Receivable 4,000

R 15,000 69,650 Land and Building (30,000 + 36,000

6,000)

1,14,250 1,14,250

Working Notes:

WN1: Sacrificing Ratio


Share

WN2: Distribution of Premium for Goodwill (in sacrificing ratio)

WN3: Withdrawn of Premium for Goodwill

WN4: Distribution of Revaluation Profit (in old ratio)

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