SHEET- 18

ADMISSION OF A PARTNER
COMPLETE PRACTICAL QUESTIONS
1) A and B carrying business in partnership and sharing profits in 3:2, require a partner when there Balance Sheet stood at:
Liabilities ₹ Assets ₹
Creditors 11,800 Cash 1,500
A’s Capital 51,450 Debtors 19,500
B’s Capital 36,750 Stock 28,000
Furniture 2,500
Machinery 48,500
1,00,000 1,00,000

They admit C into partnership and gave him 1/8th share in the future profits on the following terms:
(a) Goodwill of the firm to be valued at twice the average of the last three years profit which amounted to ₹21,000;
₹24,000 and ₹25,560.
(b) C is to bring cash for the amount of his share of goodwill.
(c) C is to bring in cash ₹15,000 as his capital.
Give journal entries, Balance Sheet of the new firm and state new profit sharing ratio and Partners Capital A/c.
2) Following was the Balance Sheet of A and B who were sharing profits in the ratio of 2:1 as at 31.03.2016.
Liabilities ₹ Assets ₹
Creditors 32,950 Cash 600
A’s Capital 15,000 Debtors 4,850
B’s Capital 10,000 Stock 10,000
Building 25,000
Machinery 17,500
57,950 57,950

They agree to admit C into partnership for following terms:

(i) C was to bring in ₹7,500 as his capital and ₹3,000 as goodwill for 1/4th share in the firm.
(ii) Values of the stock and Machinery were reduced by 5%.
(iii) A reserve was to be created in respect of sundry debtors ₹375.
(iv) Building account was appreciated by 10%.
--Prepare Profit & Loss adjustment Account (Revaluation Account), Capital Account and Balance Sheet of the firm.
3) A,B and C were partners sharing profits in 3:2:1. There Balance Sheet as on 31.03.2016 is as follows:
Liabilities ₹ Assets ₹
Creditors 30,000 Land & Building 50,000
A’s Capital 60,000 Plant and Machinery 40,000
B’s Capital 60,000 Furniture 30,000
C’s Capital 40,000 Stock 20,000
Bills Payable 10,000 Debtors 30,000
Bills Receivable 20,000
Bank 10,000
2,00,000 2,00,000
D is admitted as a new partner on 1.04.16 for an equal share and is to pay ₹50,000 as capital. Following are the adjustments relating
to D’s admission:
(a) Out of the creditors, a sum of ₹10,000 is due to D which will be transferred to his Capital.
(b) Advertisement expense of ₹1,200 are to be carried forward to next accounting period.
(c) Expenses debited to profit and loss account include a sum of ₹2,000 paid for B’s personal expense.
(d) A bill of exchange of ₹4,000 which was previously discounted with the banker was dishonoured on 31.03.2016 but
no entry has been passed for that.
(e) A provision for doubtful debts @5% to be created against debtors.
(f) Expenses on revaluation amounted to ₹2,100 is paid by A.
--- Pass necessary ledger accounts and Balance Sheet after D’s admission.
SHEET- 18

4) X and Y share profits in the ratio of 5:3. Their Balance Sheet as at 31.03.2016 was as follows:
Liabilities ₹ Assets ₹
Creditors 15,000 Sundry Debtors 20,000
X’s Capital 70,000 (-)Provision for Doubtful debts 600 19,400
Y’s Capital 31,000 Stock 25,000
Workman Compensation Reserve 5,800 Land & Building 5,000
Employees Provident Fund 10,000 Fixed Assets 80,000
Profit & Loss A/c 2,400

1,31,800 1,31,800
They admitted Z into partnership with 1/8 share. Z brings ₹20,000 as his capital and ₹12,000 for goodwill. Z acquires his share
th

entirely from X. Following revaluation are also to be made:

(a) Employees Provident Fund is to be increased by ₹5,000.
(b) All debtors are good. Therefore no provisions is to be made.
(c) Stock includes ₹3,000 for obsolete items.
(d) Creditors are to be paid ₹1,000 more.
(e) Fixed Assets are to be valued at ₹70,000.
Prepare necessary accounts.

5) A and B are in partnership sharing profits in 3:2. On 1.4.2016 they admitted C into partnership. He paid ₹50,000 as his capital but
no amount was brought forward towards goodwill which was valued at ₹40,000 for the firm. He acquires 1/5th share in profits
equally from both the partners. It was also decided that:
(a) Land and Building be written off by ₹20,000.
(b) Stock to be written down by ₹3,200.
(c) A provision of ₹1,000 be created for doubtful debts.
(d) An amount of ₹1,200 included in Sundry creditors be written back as it is no longer payable.
The balance sheet of A and B as at 31.03.2016 was as follows:
Liabilities ₹ Assets ₹
Creditors 31,200 Goodwill 10,000
A’s Capital 86,000 Land & Building 60,000
B’s Capital 64,000 Plat & Machinery 70,000
General Reserve 20,000 Stock 36,000
Debtors 20,000
Cash at Bank 4,000
Cash in Hand 1,200
2,01,200 2,01,200
Prepare Revaluation Account, Partners Capital Account and Balance Sheet of the new firm.

6) Rajesh and Ravi are partners sharing profits in the ratio of 3:2. Their Balance Sheet at 31.03.2015 stood as:
Liabilities ₹ Assets ₹
Creditors 38,500 Cash 2,000
Rajesh’s Capital 29,000 Stock 15,000
Ravi’s Capital 15,000 Prepaid Insurance 1,500
Outstanding Rent 4,000 Debtors 9,400
(-) Provision 400 9,000
Machinery 19,000
Building 35,000
Furniture 5,000
86,500 86,500
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Raman is admitted as a new partner introducing a capital of ₹16,000. The new PSR is 5:3:2. Raman is unable to bring in any cash for
goodwill. So it is decided to value the goodwill on the basis of Raman’s share in the profits and the capital contributed by him.
Following revaluations are made:
(a) Stock to be depreciated by 5%. (b) Provision for doubtful debts is to be ₹500. (c) Furniture to be depreciate by 10%. (d) Building is
valued at ₹40,000
Prepare Necessary ledger accounts and Balance Sheet of the new firm
ADMISSION OF A PARTNER
COMPLETE PRACTICAL QUESTIONS(ADJUSTMENT OF CAPITAL Q.10 & Q11)
7) A and B are partners I a firm. Their Balance sheet as at 31.03.2022 was as follows:
Liabilities ₹ Assets ₹
Provisions for Doubtful debts 4,000 Cash 10,000
Workman Compensation Reserve 5,600 Stock 20,000
Outstanding Expenses 3,000 Debtors 80,000
A’s Capital 50,000 Fixed Assets 38,600
B’s Capital 60,000 Profit & Loss Account 4,000
Creditors 30,000
1,52,600 1,52,600

C was taken into partnership as from 1st April, 2022. C brought ₹40,000 as his capital, but he is unable to bring any amount for
goodwill. New profit sharing ratio is 3:2:1. Following terms were agreed upon:
1. Claim on account of Workman’s Compensation is ₹3,000
2. To write off Bad debts amounted to ₹6,000
3. Creditors are to be paid ₹2,000 more.
4. ₹2,000 to be provided for unforeseen liability.
5. Outstanding expense to be brought down to ₹1,200.
6. Goodwill is valued at one and half years purchase of the average profits of last three years. Profits for 3 years amounted to
₹8,000; ₹10,000 and ₹18,000.
Pass Journal entries, Capital Accounts and Balance Sheet.

8) A and B are partners in a firm sharing profits in the ratio 3:2. On 31.03.2021 there balance sheet was as under:
Liabilities ₹ Assets ₹
Creditors 70,000 Bank 40,000
A’s Capital 1,50,000 Stock 60,000
B’s Capital 80,000 Debtors 1,20,000
Furniture 50,000
Goodwill 30,000
3,00,000 3,00,000

On the above data C is admitted as a partner. A surrendered 1/6th of his share and B 1/3rd of his share in favour of
C. goodwill is valued at ₹1,20,000. C brings in only 1/2 of his share of goodwill in cash and ₹1,00,000 as his capital. Following
adjustments are agreed upon:
(i) Stock is to be reduced to ₹56,000 and Furniture by ₹5,000.
(ii) There is an unrecorded assets worth ₹20,000
(iii) One month’s rent of ₹15,000 is outstanding.
(iv) A creditor for goods purchased for ₹10,000 had been omitted to be recorded although the goods had been correctly included in
stock.
(v) Insurance premium amounting to ₹8,000 was debited to P/L A/c. of which ₹2,000 is related to the period after 31.03.2021.
Prepare Revaluation A/c, Partners Capital Account and Balance Sheet of the new firm.
SHEET- 18
9) Deepika and Rajshree are partners in a firm sharing profits in the ratio 3:2. On 31.03.2021 there balance sheet was as under:
Liabilities ₹ Assets ₹
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
Deepika’s Capital 48,000 Debtors 28,800
Rajashree’s Capital 40,000 (-) Provision 800 28,000
Plant and Machinery 48,000
Land and Building 50,000
Furniture 10,000
1,73,000 1,73,000
On the above date, the partners decide to admit Anshu as a partner on the following g terms:
(i) The new profit sharing ratio of Deepika, Rajshree and Anshu will be 5:3:2 repectively.
(ii) Anshu shall bring ₹32,000 as his capital.
(iii) Anshu is unable to bring in any cash for her share of goodwill. Partners therefore decided to calculate goodwill on the basis of
Anshu’s share in the profits and the capital contribution made by him to the firm.
(iv) Plant and Machinery would be increased by ₹12,000.
(v) Stock would be increased to ₹40,000
(vi) Provision for doubtful debts is to be maintained at ₹4,000. Value of land and building has appreciated by 20%. Furniture has
depreciated by 10%.
(vii) 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, stand in the above Balance Sheet. Partners decided to show this liability in the books of accounts of
the reconstituted new firm.
Prepare Revaluation Account, Partner’s Capital Account and New Balance Sheet.

10) Amrit and Baldev were carrying on business in partnership sharing profits in the ratio of 3:2 respectively. There balance sheet
as at 31.03.2016 was follows:
Liabilities ₹ Assets ₹
Creditors 16,000 Land and Building 25,000
Amrit’s Capital 50,000 Furniture 10,000
Baldev’s Capital 25,000 Stock 46,000
Bills Payable 14,000 Debtors 20,000
Less: Provision 600 9,400
Cash at bank 4,600
1,05,000 1,05,000

Chetan is admitted in the partnership in following:

(a) New PSR is 5:3:2 (b) Land and Building is to be appreciated by 5,000;Furniture is to depreciated by 10%,Provision for doubtful
debts is to be increased by ₹300 and outstanding expenses ₹200 are to be recorded.
(c) Chetan will bring ₹20,000 as his capital and ₹6,000 as his share of goodwill. (d) The capitals of all the partners will be in their
profit sharing ratio, Amrit and Baldev will make necessary adjustment in cash.
SHEET- 18
11) X and Y are partners sharing profits in 2:1, there balance sheet 31.03.2016 was as follows:
Liabilities ₹ Assets ₹
Sundry Creditors 25,000 Cash/Bank 5,000
General Reserve 18,000 Debtors 15,000
X’s Capital 75,000 Stock 10,000
Y’s Capital 62,000 Investment 8,000
Typewriter 5,000
1,80,000 Fixed Asset 1,37,000
1,80,000
They admitted Z into partnership on the same date in the following terms:
(a) Z brings in ₹40,000 as his capital and he is given 1/4th share in profits. (b) Z brings in ₹15,000 for goodwill, half of which will be
withdrawn by old partners. (c) Investments are valued at ₹10,000. X took over investments at that value. (d) Typewriter is to be
depreciated by 20% and fixed assets by 10% (e) An unrecorded stock of stationery on 31.03.2016 is ₹1,000. (f) By bringing in or
withdrawing cash the capitals of X and Y are to be made proportionate to that of Z in their profit sharing basis.
Prepare necessary ledger accounts and balance sheet.
ADMISSION OF A PARTNER
COMPLETE PRACTICAL QUESTIONS(ADJUSTMENT OF CAPITAL)
12) A,B and C were partners sharing p/l in 2:3:5 on 31.3.15 there balance sheet was:
Liabilities ₹ Assets ₹
Sundry Creditors 64,000 Cash at Bank 18,000
Employees provident fund 32,000 Bills Receivables 24,000
Profit & Loss account 14,000 Furniture 28,000
A’s Capital 36,000 Stock 44,000
B’s Capital 44,000 Debtors 42,000
C’s Capital 52,000 Investment 32,000
Machinery 34,000
Goodwill 20,000
2,42,000 2,42,000

They admitted D into following terms:

(a) Stock to be revalued at ₹48,000. (b) Goodwill is to be valued at ₹24,000. (c) Employees provident fund is to be increased by
₹1,800. (d) Furniture, Investment, machinery is to be depreciated by 15%. (e) Prepaid Salaries ₹800
(f) D is to bring in ₹36,000 towards capital for 1/6th share and partners to readjust their capital a/c on the basis of their profit
sharing ratio. (g) D is not in a position to bring in any amount of his share of firm’s goodwill. The partners decided that the necessary
adjustments should be made through D’s Current a/c.

13) A and B are partners sharing p/l in 3:1. They admitted C as a partner for 1/4th share in the profits. C was to bring ₹60,000 for his
capital. The balance sheet of A and B at 1st April, 2016 the date on which C admitted was:
Liabilities ₹ Assets ₹
Sundry Creditors 70,000 Land and building 40,000
General Reserve 10,000 Plant and Machinery 70,000
A’s Capital 50,000 Stock 30,000
B’s Capital 80,000 Debtors 35,000
(-) Provision 1,000 34,000
Investment 26,000
2,10,000 Cash 10,000
2,10,000
(a) Goodwill of the firm was valued at ₹24,000. (b) Land and Building was valued at ₹60,000. (c) Provision for d/debts was formed
excess by ₹400. (d) A liability of ₹1,200 included in sundry creditors was not likely to be advised.
(e) The capitals of the partners be adjusted on the basis of C’s contribution capital to the firm.
(f) Excess or shortfall if any be transferred to partners current account.