MR.

MANNU SINGH

(Admission of partner)

1. A and B are partners in a firm sharing profits in the ratio of 3 : 2. They admit C as a partner on
1st April, 2019 on which date the Balance Sheet of the firm was:

Liabilities ₹ Assets ₹

Capital A/cs: Building 50,000
A 60,000 Plant and Machinery 30,000
B 40,000 1,00,000 Stock 20,000
Creditors 20,000 Debtors 10,000
Bank 10,000

1,20,000 1,20,000

You are required to prepare the Revaluation Account, Partners' Capital Accounts and Balance Sheet of the
new firm after considering the following:
(a) C brings ₹ 30,000 as capital for 1/4th share. He also brings ₹ 10,000 for his share of goodwill.
(b) Part of the Stock which had been included at cost of ₹ 2,000 had been badly damaged in storage and
could only expect to realise ₹ 400.
(c) Bank charges had been overlooked and amounted to ₹ 200 for the year 2018-19.
(d) Depreciation on Building of ₹ 3,000 had been omitted for the year 2018-19.
(e) A credit for goods for ₹ 800 had been omitted from both purchases and creditors although the goods had
been correctly included in Stock.
(f) An expense of ₹ 1,200 for insurance premium was debited in the Profit and Loss Account of 2018-19
but ₹ 600 of this are related to the period after 31st March, 2019.

2. Divya, Yasmin and Fatima are partners in a firm, sharing profits and losses in 11 : 7 : 2
respectively. The Balance Sheet of the firm on 31st March, 2018 was as follows:
BALANCE SHEET as at 31st March, 2018
Amount Amount
Liabilities Assets
(₹) (₹)
Sundry Creditors 70,000 Factory Building 7,35,000
Public Deposits 1,19,000 Plant and Machinery 1,80,000
Reserve Fund 90,000 Furniture 2,60,000
Outstanding Expenses 10,000 Stock 1,45,000
Capital A/cs: Debtors 1,50,000
Divya 5,10,000 Less: Provision (30,000) 1,20,000
Yasmin 3,00,000 Cash at Bank 1,59,000
Fatima 5,00,000 13,10,000
15,99,000 15,99,000

On 1st April, 2018, Aditya is admitted as a partner for one-fifth share in the profits with a capital of ₹ 4,50,000
and necessary amount for his share of goodwill on the following terms:
(a) Furniture of ₹ 2,40,000 were to be taken over Divya, Yasmin and Fatima equally.
(b) A creditor of ₹ 7,000 not recorded in books to be taken into account.
(c) Goodwill of the firm is to be valued at 2.5 years' purchase of average profits of last two years. The profit of
the last three years were:
2015-16 − ₹ 6,00,000; 2016-17 − ₹ 2,00,000; 2017-18 − ₹ 6,00,000.
(d) At time of Aditya's admission. Yasmin also brought in ₹ 50,000 as fresh capital.
(e) Plant and Machinery is re-valued to ₹ 2,00,000 and expenses outstanding were brought down to ₹
9,000.
Prepare Revaluation Account, Partners Capital Account and the Balance Sheet of the reconstituted firm.

3. A and B are partners in a firm. The net profit of the firm is divided as follows: 1/2 to A, 1/3
to B and 1/6 carried to a Reserve. They admit C as a partner on 1st April, 2019 on which
date, the Balance Sheet of the firm was:
 Liabilities ₹ Assets ₹
Capital A/cs: Building 50,000
A 50,000 Plant and Machinery 30,000
B 40,000 90,000 Stock 18,000
Reserve 10,000 Debtors 22,000
Creditors 20,000 Bank 5,000
Outstanding Expenses 5,000

1,25,000 1,25,000

Following are the required adjustments on admission of C:

(a) C brings in ₹ 25,000 towards his capital.
(b) C also brings in ₹ 5,000 for 1/5th share of goodwill.
(c) Stock is undervalued by 10%.
(d) Creditors include a liability of ₹ 4,000, which has been decided by the court at ₹ 3,200.
(e) In regard to the Debtors, the following Debts proved Bad or Doubtful−
₹ 2,000 due from X−bad to the full extent;
₹ 4,000 due from Y−insolvent, estate expected to pay only 50%.
You are required to prepare Revaluation Account, Partners' Capital Accounts and Balance Sheet of the new
firm.

4. Following is the Balance Sheet of the firm, Ashirvad, owned by A, B and C who share profits
and losses of the business in the ratio of 3 : 2 : 1.
BALANCE SHEET as at 31st March, 2019
Liabilities ₹ Assets ₹
Capital A/cs: Furniture 95,000
A 1,20,000 Business Premises 2,05,000
B 1,20,000 Stock-in-Trade 40,000
C 1,20,000 3,60,000 Debtors 28,000
Sundry Creditors 20,000 Cash at Bank 15,000
Outstanding Salaries and wages 7,200 Cash in Hand 4,200

3,87,200 3,87,200

On 1st April, 2019, they admit D as a partner on the following conditions:

(a) D will bring in ₹ 1,20,000 as his capital and also ₹ 30,000 as goodwill premium for a quarter of the share
in the future profits/losses of the firm.
(b) Values of the fixed assets of the firm will be increased by 10% before the admission of D.
(c) Mohan, an old customer whose account was written off as bad debts, has promised to pay ₹ 3,000 in full
settlement of his dues.
(d) Future profits and losses of the firm will be shared equally by all the partners.
Pass the necessary Journal entries and prepare Revaluation Account, Partners' Capital Accounts and
opening Balance Sheet of the new firm.

5. A and B are partners in a firm sharing profits and losses in the ratio of 3 : 2. Following is their
Balance Sheet as at 31st March, 2019:

Liabilities ₹ Assets ₹

Capital A/cs: Building 35,000
A 50,000 Machinery 25,000
B 30,000 80,000 Stock 15,000
Creditors 20,000 Debtors 15,000
Investments 5,000
Bank 5,000

1,00,000 1,00,000

​
C is admitted as a partner on 1st April, 2019 on the following terms:
(a) C is to pay ₹ 20,000 as capital for 1/4th share. He also pays ₹ 5,000 as premium for goodwill.
 (b) Debtors amounted to ₹ 3,000 is to be written off as bad and a Provision of 10% is created against
Doubtful Debts on the remaining amount.
(c) No entry has been passed in respect of a debt of ₹ 300 recovered by A from a customer, which was
previously written off as bad in previous year. The amount is to be paid by A.
(d) Investments are taken over by B at their market value of ₹ 4,900 against cash payment.
You are required to prepare Revaluation Account, Partner's Capital Accounts and new Balance Sheet.

6. X and Y are partners sharing profits and losses in the ratio of 3/4 and 1/4. Their Balance
Sheet as at 31st March, 2019 is:

Liabilities ₹ Assets ₹

Capital A/cs: Land and Building 1,25,000
X 1,50,000 Furniture 5,000
Y 80,000 2,30,000 Stock 1,00,000
Workmen Compensation 20,000 Sundry Debtors 80,000
Reserve
Sundry Creditors 1,50,000 Bills Receivable 15,000
Bills Payable 37,500 Cash at Bank 1,00,000
Cash in Hand 12,500
4,37,500 4,37,500

They admit Z into partnership on 1st April, 2019 on the following terms:
(a) Goodwill is to be valued at ₹ 1,00,000.
(b) Stock and Furniture to be reduced by 10%.
(c) A Provision for Doubtful Debts is to be created @ 5% on Sundry Debtors.
(d) The value of Land and Building is to be appreciated by 20%.
(e) Z pays ₹ 50,000 as his capital for 1/5th share in the future profits.
You are required to show Revaluation Account, Partners' Capital Accounts and Balance Sheet of the new
firm.

7. Deepika and Rajshree are partners in a firm sharing profits and losses in the ratio of 3 : 2. On
31st March, 2019 their Balance Sheet was:

Liabilities ₹ Assets ₹

Sundry Creditors 16,000 Cash in Hand 1,200
Public Deposits 61,000 Cash at Bank 2,800
Bank Overdraft 6,000 Stock 32,000
Outstanding Liabilities 2,000 Prepaid Insurance 1,000
Capital A/cs: Sundry Debtors 28,000
Deepika 48,000 Less: Provision for Doubtful Debts 800
Rajshree 40,000 88,000 Plant and Machinery 48,000
Land and Building 50,000
Furniture 10,000

1,73,000 1,73,000

On 1st April, 2019 the partners admit Anshu as a partner on the following terms:
(a) The new profit-sharing ratio of Deepika, Rajshree and Anshu will be 5 : 3 : 2 respectively.
(b) Anshu shall bring in ₹ 32,000 as his capital.
(c) Anshu is unable to bring in any cash for his share of goodwill. Partners, therefore, decide to calculate the
goodwill on the basis of Anshu's share in the profits and the capital contribution made by her to the firm.
(d) Plant and Machinery is to be valued at ₹ 60,000, Stock at ₹ 40,000 and the Provision for Doubtful Debts
is to be maintained at ₹ 4,000. Value of Land and Building has appreciated by 20%. Furniture has been
depreciated by 10%.
(e) There is an additional liability of ₹ 8,000 being outstanding salary payable to employees of the firm. This
liability is not included in the outstanding liabilities, stated in the above Balance Sheet. Partners decide to
show this liability in the books of account of the reconstituted firm.
Prepare Revaluation Account, Partners' Capital Accounts and Balance Sheet of Deepika, Rajshree and
Anshu.
 8. Atul and Amit are partners sharing profits in the ratio of 3 : 2. Their Balance Sheet as at 31st
March, 2019 is as follows:

Amount Amount
Liabilities Assets
(₹) (₹)
Capital A/cs: Plant and Machinery 1,80,000
Atul 1,00,000 Furniture 30,000
Amit 1,00,000 2,00,000 Computer 10,000
Current A/cs: Stock 40,000
Atul 70,000 Debtors 50,000
Amit 50,000 1,20,000 Bills Receivable 10,000
Creditors 40,000 Cash 10,000
Bills Payable 10,000 Bank 40,000
3,70,000 3,70,000

​Abhay is admitted as a partner for 1/4th share on 1st April, 2019 on the following terms:
(a) Abhay is to bring ₹ 65,000 as capital after adjusting amount due to him included in creditors and his
share of Goodwill.
(b) ₹ 10,000 included in creditors is payable to Abhay which is to be transferred to his Capital Account.
(c) Furniture is to reduced by ₹ 3,000 and Plant and Machinery is to be increased to ₹ 1,98,000.
(d) Stock is overvalued by ₹ 4,000.
(e) A Provision for Doubtful Debts is to be created @ 5%.
(f) Goodwill is to be valued at 2 years' purchase of average profit for four years. Profits of four years ended
31st March were as follows: 2018-19 − ₹ 25,000, 2017-18 − ₹ 10,000, 2016-17 − ₹ 2,500, and 2015-
16 − ₹ 2,500.
Pass the Journal entries for the above arrangement.

9. Yogesh and Naresh are partners sharing profits in the ratio of 3 : 2. They admit Ramesh for
1/3rd share on 1st April, 2019 and also decide to share future profits equally. Balance Sheet
of the firm as at 31st March, 2019 was as follows:
Amount (â‚
Liabilities Amount (₹) Assets
¹)
Capital A/cs: Land 4,00,000
Yogesh 5,00,000 Building 4,00,000
Naresh 5,00,000 10,00,000 Furniture 50,000
Current A/cs: Computers 1,00,000
Yogesh 1,10,000 Stock 1,50,000
Naresh 90,000 2,00,000 Sundry Debtors 2,10,000
Employees' Provident Fund 25,000 Less: Provision for Doubtful Debts 10,000 2,00,000
Workmen Compensation 1,00,000 Cash 10,000
Reserve
Sundry Creditors 75,000 Bank 70,000
Expenses Payable 10,000 Advertisement Suspense 30,000
14,10,000 14,10,000

They admitted Ramesh on the following terms:

(a) He will bring ₹ 5,00,000 as his capital.
(b) His share of goodwill is valued at ₹ 1,00,000 but he is unable to bring cash for his share of goodwill. It is
agreed to debit the amount to his Current Account.
(c) Value of Land and Building is to be appreciated by ₹ 40,000 each.
(d) Value of Furniture to be reduced to ₹ 40,000.
(e) Provision for Doubtful Debts to be increased to 10%.
(f) A liability for damages of ₹ 10,000 is to be created.
Pass the Journal entries on admission of Ramesh and prepare Revaluation Account.

10. Balance Sheet of Ram and Shyam who shares profits in the ratio of their capitals as at 31st
March, 2019 is:

Liabilities Amount Assets Amount

 (₹) (₹)
Capital A/cs: Freehold Premises 20,000
Ram 30,000 Plant and Machinery 13,500
Shyam 25,000 55,000 Fixtures and Fittings 1,750
Current A/cs: Vehicles 1,350
Ram 2,000 Stock 14,100
Shyam 1,800 3,800 Bills Receivable 13,060
Creditors 19,000 Debtors 27,500
Bills Payable 16,000 Bank 1,590
Cash 950

93,800 93,800

On 1st April, 2019, they admitted Arjun into partnership on the following terms:
(a) Arjun to bring ₹ 20,000 as capital and ₹ 6,600 for goodwill, which is to be left in the business and he is
to receive 1/4th share of the profits.
(b) Provision for Doubtful Debts is to be 2% on Debtors.
(c) Value of Stock to be written down by 5% .
(d) Freehold Premises are to be taken at a value of ₹ 22,400; Plant and Machinery ₹ 11,800; Fixtures and
Fittings ₹ 1,540 and Vehicles ₹ 800.
You are required to make necessary adjustments entries in the firm, give Balance Sheet of the new firm as at
1st April, 2019 and also determine the ratio in which the partners will share profits, there being no change in
the ratio of Ram and Shyam.

11. Following is the Balance Sheet of X and Y as at 31st March, 2019 who are partners in a firm
sharing profits and losses in the ratio of 3 : 2 respectively:

Amoun
Amount (₹
Liabilities t Assets
)
(₹)
Creditors 45,000 Cash at Bank 15,000
General Reserve 36,000 Debtors 60,00
0
Capital A/cs: Less: Provision for Doubtful 2,400 57,600
Debts
X 1,80,00 Patents 44,400
0
Y 90,000 2,70,00 Investments 24,000
0
Current A/cs: Fixed Assets 2,16,000
X 30,000 Goodwill 30,000
Y 6,000 36,000

3,87,00 3,87,000
0

Z is admitted as a new partner on 1st April, 2019 on the following terms:

(a) Provision for doubtful debts is to be maintained at 5% on Debtors.
(b) Outstanding rent amounted to ₹ 15,000.
(c) An accrued income of ₹ 4,500 does not appear in the books of the firm. It is now to be recorded.
(d) X takes over the Investments at an agreed value of ₹ 18,000.
(e) New Profit-sharing Ratio of partners will be 4 : 3 : 2.
(f) Z will bring in ₹ 60,000 as his capital by cheque.
(g) Z is to pay an amount equal to his share in firm's goodwill valued at twice the average profit of the last
three years which were ₹ 90,000; ₹ 78,000 and ₹ 75,000 respectively.
(h) Half of the amount of goodwill is to be withdrawn by X and Y.
You are required to pass Journal entries, prepare Revaluation Account, Partners' Capital and Current
Accounts and the Balance Sheet of the new firm.

12. X and Y are partners sharing profits equally. Their Balance Sheet as on 31st March, 2019 is
given below:
 Amount Amount
Liabilities Assets
(₹) (₹)
Capital A/cs: Land and Building 1,50,000
X 1,50,000 Plant and Machinery 1,00,000
Y 1,00,000 2,50,000 Furniture and Fittings 25,000
Current Stock 75,000
A/cs:
X 40,000 Debtors 75,000
Y 30,000 70,000 Less: Provision for Doubtful Debts 5,000 70,000
Creditors 1,30,000 Bills Receivable 30,000
Bills Payable 50,000 Bank 50,000

5,00,000 5,00,000

Z is admitted as a new partner for 1/4th share under the following terms:
(a) Z is to introduce ₹ 1,25,000 as capital.
(b) Goodwill of the firm was valued at nil.
(c) It is found that the creditors included a sum of ₹ 7,500 which was not to be paid. But it was also found
that there was a liability for Compensation to Workmen amounting to ₹ 10,000.
(d) Provision for doubtful debts is to be created @ 10% on debtors.
(e) In regard to the Partners' Capital Accounts, present Fixed Capital Account Method is to be converted into
Fluctuating Capital Account Method.
(f) Bills of ₹ 20,000 accepted from creditors were not recorded in the books.
(g) X provides ₹ 50,000 loan to the business carrying interest @ 10% p.a.
You are required to prepare Revaluation Account, Partners' Capital Accounts, Bank Account and the Balance
Sheet of the new firm.