PART 1

Admission of a partner is reconstitution

of the firm because with the admission of
a partner, existing partnership deed or
agreement ends and new agreement
among all the partners come into force.
According to section 31 of the partnership Act 1932,
A person can be admitted as a partner
i) If it is so agreed in the partnership deed, or
ii) In the absence of the agreement if all the partners agree to admit a new partner

New partners is admitted for extension of capital and New Skills

New partner compensate all those partner(s) who sacrifice their profits shares in his or her favour.
The amount new partners pay for their sacrifice is called Premium for Goodwill.
Adjustment Required on Admission of a Partner
➢ Change in PSR
➢ Goodwill valuation
➢ Adjustment of gain/loss (Revaluation A/c)
➢ Reserve and Accumulated Profit & Loss
➢ Adjustment of Capital
 Sacrificing ratio = Old ratio – New ratio
(Old partners will sacrifice for upcoming partner)

Revaluation Gain will distributed in Old ratio

among Old partners

Note:
All the Distributable items are also Distributed in Old Ratio.

NEW PROFIT SHARING RATIO

Simple Case Surrender Case Acquire Case

OR OR OR
Normal Case Gives Case Takes case
Calculation of New ratio and sacrificing ratio
Q.1) Ram and Shyam are partners sharing profits in the ratio of 5:3. Sohan is admitted for 1/4th Share in the
Profits. Calculate New Profit Sharing Ratio of the partners.
Q.2) P, Q and R were partners in a firm sharing profits in the ratio of 3:2:1. They admitted S for 10% share in
profits. Calculate New Profit Sharing Ratio.
Q.3) A, B, C and D are in partnership sharing profits and losses in the ratio of 36:24: 20:20 respectively.
E joins the partnership for 20% share and A, B, C and D in future would share profits among themselves as
3/10: 4/10: 2/10: 1/10. calculate new profit sharing ratio after E’s admission.
Q.4) A, B and C are partners sharing profits in the ratio of 4:3:2. D is admitted for 1/3rd share in future
profits. What is the sacrificing ratio?
Q.5) A and B are partners in a firm sharing profits and losses in the ratio of 7:3. A surrenders 1/4th of his share
and B surrenders 1/2 of his share in favour of C; the new partner.
Calculate new profit-sharing ratio of A,B & C.
Q.6) X, Y and Z are partners sharing profits in the ratio of 2:2:1. W is admitted as a new partner for 1/6th share.
Z is to retain his original share. Calculate new profit sharing ratio.
Q.7) Anil and Sunil are partners sharing profits in the ratio of 5:4. They admit Kunal for 1/10th share of profits
which he acquires equally from both. Find the new profit sharing ratio.
Q.8) Mohan and Mahesh are partners in a firm sharing profits and losses in the ratio of 3:2. Nusrat is
admitted as partner with 1/4 share in profit. Nusrat takes his share from Mohan and Mahesh in the ratio of
2:1. Calculate new profit sharing ratio.
Q.9) Gautam and Yashica were partners in a firm sharing profits in the ratio of 5:3. They admit Asma for 1/4
share in the profits, of which she took 75% from P and the remaining from Q. Calculate the New Ratio and
Sacrificing ratio of P and Q.
Q.10) Amit and Vidya are partners sharing profits in the ratio of 3:2. They admit Chintan into partnership
who acquires 1/5th of his share from Amit and 4/25th share from Vidya. Calculate new profit sharing ratio
and sacrificing ratio.
Thank you
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PART 2
 JOURNAL ENTRIES AT THE TIME OF ADMISSION OF A PARTNER

Particulars L.f. Dr. Cr.

1. When New Partner bring his share of Capital in Cash
Bank/Cash A/c Dr. XX
To New Partners Capital A/c XX
2. When New Partner bring his share of Goodwill in Cash
Bank/Cash A/c Dr. XX
To Premium for Goodwill A/c XX

Premium for Goodwill A/c Dr. XX

To Sacrificing Partner’s Capital/Current A/c (in Sacrificing Ratio) XX
3. When New Partner is unable to bring his share of Goodwill
New Partner Current A/c Dr. XX
To Old Partner’s Current /Capital A/c (in Sacrificing Ratio) XX
4. When Old Partner’s withdrew the amount of Goodwill bring by new partner.
Old Partners Capital/ Current A/c Dr. XX
To Cash/ Bank A/c (in Sacrificing Ratio) XX
 JOURNAL ENTRIES AT THE TIME OF ADMISSION OF A PARTNER

Particulars L.f. Dr. Cr.

5. When there is an Existing Goodwill in the Old Balance sheet
Then it will be written off

Old Partner’s Capital/Current A/c Dr. XX

To Goodwill A/c (in Old Ratio) XX
6. When New Partner Pay the amount of his share of Goodwill Privately

NO ENTRY
Q.11) Vimal and Nirmal are partners in a firm sharing profits and losses in the ratio of 3:2. A new partner
Kailash is admitted. Vimal gives 1/5th of his share and Nirmal gives 2/5th of his share in favour of Kailash. For
the purpose of Kailash admission goodwill of the firm is valued at 75,000 and Kailash brings his share of
goodwill in cash which is retained in the business. Journalise the above transactions.
Q.12) Anita and Babita were partners sharing profits and losses in the ratio of 3:1. Savita was admitted for
1/5th share in the profits. Savita was unable to bring her share of goodwill premium in cash. The journal
entry recorded for goodwill premium is given below:

Savita Current A/c Dr. 24,000

To Anita Capital A/c 8,000
To Babita Capital A/c 16,000
(Being Adjustment of goodwill premium on Savita Admission)

Calculate firm Goodwill and New Ratio of Anita, Babita and Savita
Q.13) Ankur and Bhim were partners in a firm sharing profits in the ratio of 4:3. They admitted Cheeku as a
new partner for 3/7th share in the profits of the firm. New profit sharing ratio will be 2:2:3, Cheeku brought
4,00,000 as his capital and 1,20,000 for his share of premium for goodwill, half of which was withdrawn by
Ankur and Bhim from the firm.
pass necessary journal entries in the books of the firm for the above transactions.
Q.14) X and Y are partners in a firm sharing profits in the ratio of 3:2. On 1st April, 2024, they admit Z as a
partner for 3/13th share in the profits. New profit ratio will be 5:5:3. Z contributed the following assets to his
capital and his share for premium for goodwill:
Stock 80,000; Debtors 1,20,000; Land 2,00,000; Plant and Machinery 1,20,000.
on the date of admission of Z goodwill of the firm was valued at 10,40,000. X and Y withdrew their
respective share of Premium for Goodwill. Pass necessary Journal Entries in the books of the firm on Z’s
admission.
Q.15) A and B are partners sharing profit and losses in the ratio of 3:2. They admit C as partner in the firm for
1/4th share in profit which he takes 1/6th from A and 1/12th from B.
C bring 60% out of his share of goodwill. Goodwill of the firm was valued at 1,00,000. Pass necessary journal
entries to record this arrangement
Q.16) Ravi and Kavi were partners in a firm sharing profits in the ratio of 3:2. They admit Shail into
partnership for 1/4th share in profits. The partners passed the following journal entries at the time of
admission of Shail

Date Particulars L.F Dr Cr

Bank A/c Dr. 3,00,000
To Shail’s Capital A/c 2,50,000
To Premium for Goodwill A/c 50,000
(capital and premium for goodwill brought in cash)
Premium for Goodwill A/c Dr. 50,000
Kavi’s capital A/c 20,000
To Ravi’s Capital A/c 70,000
(Premium for Goodwill credited to Ravi capital A/c)

Calculate (i) Firm goodwill; (ii) Sacrifice/Gain to Ravi and Kavi on Shail admission and (iii) New Profit
Sharing Ratio.
Q.17) Anu and Bhagwan were partners in a firm sharing profit in the ratio of 3:1. Goodwill appeared in the books
at 4,40,000. Raja was admitted to the partnership. New profit-sharing ratio among Anu, Bhagwan and Raja 2:2:1
Raja brought 1,00,000 for his capital and necessary cash for his goodwill premium. Goodwill of the firm was
valued at 2,50,000.
Record necessary journal entries in the books of the firm for the above transactions.
Q.18) Asha and Aditi are partners in a firm sharing profits and losses in the ratio of 3:2. They admit Raghav
as a partner for 1/4th share in the profits of the firm. Raghav brings 6,00,000 as his capital and his share of
goodwill in cash. Goodwill of the firm is to be valued at two years’ purchase of average profit of the last four
years.
The profit of the firm during the last four years are given below:

YEAR PROFIT

2013-14 3,50,000
2014-15 4,75,000
2015-16 6,70,000
2016-17 7,45,000

the following additional information is given

i) To cover management cost an annual charge of 56,250 should be made for the purpose of valuation of
goodwill
ii) The closing stock for the year ended 31st March, 2017 was overvalued by 15,000.
Pass necessary journal entries on Raghav’s admission showing the working notes clearly
Thank you
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PART 3
 HIDDEN OR INFERRED GOODWILL

Sometimes, value of goodwill of the firm is not given. It has to be inferred on the basis of net worth (capital)
of the firm.

In case of admission of a new partner. Hidden goodwill is the excess of total capital of the firm as calculated
on the basis of new partner capital over the adjusted capital of the existing partner and capital of incoming
partner.
Q.19) Komal and Vimal are partners in a firm with capital of 30,000 and 60,000 respectively. They decide to
admit Nirmal into the partnership for 1/4th share in the future profits. Nirmal is to bring in a sum of 35,000
as his capital. Calculate amount of goodwill and Pass the necessary Journal entry.
Q.20) A and B are partners in a firm with the capital balances of 3,60,000; and 2,40,000 respectively, sharing
profits and losses in the ratio of 3:2. They admitted C into the firm from the 1/6th share of profits. He brings
2,00,000 as capital. The firm had a General reserve of 80,000 and an undistributed profit of 20,000 at the
time of admission of C. Calculate the firm’s goodwill and C’s share of goodwill
Q.21) Asin and Shreyas are partners in a firm. They admit Ajay as a new partner with 1/5th share in the
profits of the firm. Ajay brings 5,00,000 as his share of capital. The value of total assets of the firm was
15,00,000 and outside liabilities were valued at 5,00,000 on that date. Give necessary journal entry to
record goodwill at the time of Ajay’s admission. Also show your workings.
 Revaluation Account
It means revaluation of assets and Reassessment of liabilities. When the profit sharing ratio changed and the
gain or loss arising from it is transferred to the credit or debit side of partner’s capital/current account in their
old profit sharing ratio. Because the incoming partner is not taken an advantage or at disadvantage of the
values changes.
Nature of Revaluation Account- Nominal Account
Revaluation Gain or Loss transferred to Partner’s Capital/ Current A/c in OLD RATIO (Among old partners)

Dr. Revaluation Account Cr.

Particulars Amount Particulars Amount
To Increase in liability x By Decrease in liability x
To Decrease in assets x By Increase in assets x
To Unrecorded liability x By Unrecorded assets x
To Revaluation Gain transferred to x By Revaluation Loss transferred to x
Partner’s Capital/ Current A/c Partner’s Capital/ Current A/c

xx xx
Q.22) At the time of admission of a partner Suresh, Assets and Liabilities of Ramesh and Naresh were
revalued as follows:
a) A Provision for doubtful debts @ 10% was made on sundry debtors (sundry debtors 50,000)
b) Creditors were written back by 5,000
c) Building was appreciated by 20% (book value of building 2,00,000)
d) Unrecorded investments were valued at 15,000
e) A provision of 2,000 was made for an outstanding bill for repairs
f) Unrecorded liabilities towards suppliers was 3,000
Pass the necessary journal entries.
Q.23) At the time of admission C, Assets and Liabilities of A and B were revalued as follows:
Prepare Revaluation A/c,
Profit sharing ratio of A and B is 3:2.

a) Machinery reduce by 10000 and building appreciated by 30,000

b) Outstanding Bill of repairs amounts to 600
c) A provision be created for doubtful debts@5% on debtors of ₹ 50,000
d) Furniture (Book value ₹50,000) is to be reduced by 40%
e) Computer (Book value of ₹40,000) is to be reduced to 40%
f) Insurance premium carry forward for next year 2,000
g) Revaluation expense amounts to 600 paid by A
h) Stock found undervalued by 10% ( Stock appear in Balance sheet 18000 )
i) One-third of machinery is taken by B for 30,000 and balance is revalued at 57,600 (Book value of
machinery 72,000)
j) Value of furniture is to be brought up 120% of its value (book value of furniture 50,000)
k) Stock found Overvalued by 20% (book value of stock 36,000)
Thank you
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PART 4
 Treatment of Accumulated Profit & Losses and Reserves
Old Balance Sheet
Liabilities Amount Assets Amount
Reserve XX Goodwill XX
Profit & loss Cr. Balance XX Profit & Loss Dr. Balance XX
Workmen Compensation Reserve XX Advertisement Suspense XX
Investment Fluctuation Reserve XX

Distributed in Old Ratio

Dr. Partner’s Capital Account Cr.

Particulars A B C Particulars A B C
To Goodwill By Reserve
To Profit & Loss Dr. Balance By Profit & loss Cr. Balance
To Advertisement Suspense By Workmen Compensation Reserve
By Investment Fluctuation Reserve
Preparation of Partner’s capital Account and Cash/ Bank Account
Q.24) Given below is the Balance Sheet of A and B on 31st March, 2023 who are carrying on partnership
business. A and B share profits and losses in the ratio of 2:1
Liabilities Amount Assets Amount
Bills payable 10,000 Cash in hand 10,000
Creditors 58,000 Cash at bank 40,000
Outstanding expenses 2,000 Sundry debtors 60,000
Capital A/c Stock 40,000
A 1,80,000 Plant 1,00,000
B 1,50,000 3,30,000 Building 1,50,000
4,00,000 4,00,000
C is admitted as a partner on 1st April, 2023 on the following terms:
a) C will bring 1,00,000 as his capital and 60,000 as his share of goodwill for 1/4th share in the profits
b) Plant is to be appreciated to 1,20,000 and the value of building is to be appreciated by 10%
c) Stock is found overvalued by 4,000
d) A provision for doubtful debts is to be created at 5% of sundry debtors
e) Creditors were unrecorded to the extent of 1,000
Prepare Revaluation Account and Partners’ Capital Account and Balance sheet of new firm.
Thank you
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PART 5
Q.25) Chander and Damini were partners in a firm sharing profits and losses equally. On 31st March, 2017
their Balance Sheet was as follows:
Liabilities Amount Assets Amount
Sundry creditors 1,04,000 Cash at bank 30,000
Capitals: Bills receivables 45,000
Chander 2,50,000 Debtors 75,000
Damini 2,16,000 4,66,000 Furniture 1,10,000
Land and buildings 3,10,000
5,70,000 5,70,000
i) On 1st April, 2017 they admitted Elina as a new partner for 1/3rd share in the profits on the following
conditions:
ii) Elina will bring 3,00,000 as her capital and 50,000 as her share of goodwill premium, half of which will be
withdrawn by Chander and Damini.
Iii) Debtors to the extent of 5,000 were unrecorded.
iv) Furniture will be reduced by 10% and 5% provision for bad and doubtful debts will be created on bill
receivables and debtors.
v) Value of land and Building will be appreciated by 20%.
vi) There being a claim against the firm for damages, a liability to the extent of 8,000 will be created for the
same.
Prepare Revaluation Account and Partner’s Capital Account.
Q.26) Balance sheet of Madhu and Vidhi who are sharing profits in the ratio of 2:3 as at 31st March, 2023 is
given below:

Liabilities Amount Assets Amount

Madhu capital 5,20,000 Land and building 3,00,000
Vidhi capital 3,00,000 Machinery 2,80,000
General Reserve 30,000 Stock 80,000
Bill payable 1,50,000 Debtors 3,00,000
Less PFDD: (10,000) 2,90,000
Bank 50,000
10,00,000 10,00,000

Madhu and Vidhi decided to admit Gayatri as a new partner from 1st April, 2023 and their new profit-sharing
ratio will be 2:3:5. Gayatri brought 4,00,000 as her capital and her share of goodwill premium in cash.
a) Goodwill of the firm was valued at 3,00,000
b) Land and building was found undervalued by 26,000
c) Provision for doubtful debts was to be made equal to 5% of the debtors
d) There was a claim of 6,000 on account of workmen compensation.
Prepare revaluation account and partners capital account.
Thank you
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PART 6
Q.27) A and B are partners in a firm. 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, 2023 on which
date, the balance sheet of the firm was:

Liabilities Amount Assets Amount

Capital of A 50,000 Building 50,000
Capital of B 40,000 Plant and machinery 30,000
Reserve 10,000 Stock 18,000
Creditors 20,000 Debtors 22,000
Outstanding expenses 5,000 Bank 5,000
1,25,000 1,25,000
Following are the required adjustments on admission of C:
a) C bring in 25,000 towards his capital
b) C also brings in 5,000 for 1/5th share of goodwill
c) Creditors include a liability of 4,000 which has been decided by the court at 3,200
d) in regard to debtors. The following debt 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%
e) Stock was undervalued by 10%
You are required to prepare revaluation account and partners capital account.
Q.28) X and Y share profits in the ratio of 5:3. Their balance sheet as at 31st March, 2023 was:

Liabilities Amount Assets Amount

Creditors 15,000 Cash at bank 5,000
Employee provident fund 10,000 Sundry debtors 20,000
Workmen compensation reserve 5,800 Less PFDD (600) 19,400
Capital of X Stock 25,000
Capital of Y 70,000 Fixed assets 80,000
31,000 Profit & Loss a/c 2,400
1,31,800 1,31,800
The admit Z into partnership with 1/8th share in profits on 1st April, 2023. Z brings 20,000 as his capital and
12,000 for goodwill in cash. Z acquires his share from X. Following revaluation are also made:
a) Employees provident fund liability is to be increased by 5,000
b) All debtors are good
c) Stock includes 3,000 for obsolete items. Hence are to be written off
d) Creditors are to be paid 1,000 more
e) Fixed assets are to be revalued at 70,000
Prepare revaluation account and partners capital account.
Thank you
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PART 7
Q.29) Anikesh and Bhavesh are partners in a firm sharing profits in the ratio of 7:3. Their Balance Sheet as on
31st March, 2023 was as follows:
Balance Sheet of Anikesh and Bhavesh as on 31st March, 2023
Liabilities Amount Assets Amount
Creditors 60,000 Cash 36,000
Outstanding wages 9,000 Debtors 54,000
General reserve 15,000 Less: PFDD 6,000 48,000
Capital Stock 60,000
Anikesh 1,20,000 Furniture 1,20,000
Bhavesh 1,80,000 3,00,000 Machinery 1,20,000
3,84,000 3,84,000

On the 1st April, 2023 Chahat was admitted for 1/4th share in the profits on the following terms:
i) Chahat will bring 90,000 as her capital and 30,000 as her share of Goodwill Premium
ii) Outstanding wages will be paid
iii) Stock will be reduced by 10%
iv) A creditor of 6,300 not recorded in the books, was to be taken into account
Pass necessary Journal Entries for the above transactions in the books of the firm.
Q.30) Following is the balance sheet of Jay and Veeru as at 31st March, 2023 who are partners in a firm
sharing profits and losses in the ratio of 3:2 respectively

Liabilities Amount Assets Amount

Creditors 45,000 Cash at bank 15,000
General reserve 36,000 Debtors 60,000
Capital A/c of jay 1,80,000 Less PFDD (2,400) 57,600
Capital A/c of Veeru 90,000 Patents 44,400
Current A/c of Jay 30,000 Investment 24,000
Current A/c of Veeru 6,000 Fixed assets 2,16,000
Goodwill 30,000

3,87,000 3,87,000
Sri is admitted as a new partner on 1st April,2023 on the following terms:
a) Provision for doubtful debts is to be maintained at 5% on debtors
b) Outstanding rent payable was 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) Jay takes over the investments at an agreed value of 18,000
e) New profit sharing ratio of partner will be 4:3:2
f) Sri will bring in 60,000 as his capital by cheque
g) Sri is to pay an amount equal to his share in firm goodwill valued at twice the average profit of the last
three years ended 31st March, 2023 , 2022 and 2021 which were 90,000; 78,000 and 75,000 respectively
h) Half of the amount of goodwill is to be withdrawn by Jay and Veeru
You are required to prepare revaluation account, Partners current and partners capital account.
Thank you
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PART 8
ADJUSTMENT OF CAPITAL (CASE 1)
Q.1) Rohit and Rohan are partners in a firm sharing profits in the ratio of 3:2. The remaining capitals of Rohit
and Rohan after adjustment are 40,000 and 30,000 respectively. They admit Ravi as a partner on his
contribution of 17,500 as capital for 1/5th share of profits to be acquired equally from both Rohit and Rohan.
The capital account of the old partners are to be adjusted on the basis of the proportion of Ravi’s capital to his
share in the business. Calculate the amount of actual cash to be paid off or brought in by the old partners for
the purpose and also Pass Necessary journal entries for the same.
Q.2) Om, Ram and Shanti were partners in a firm sharing profits in the ratio of 3:2:1. On 31st March, 2023,
their Balance Sheet was as follows:
Liabilities Amount Assets Amount
Capitals Land and building 3,64,000
Om 3,58,000 Plant and machinery 2,95,000
Ram 3,00,000 Furniture 2,33,000
Shanti 2,62,000 9,20,000 Bills receivables 38,000
General reserve 48,000 Sundry creditors 90,000
Creditors 1,60,000 Stock 1,11,000
Bills payables 90,000 Bank 87,000
12,18,000 12,18,000
On 1st April 2024 Hanuman was admitted on the following terms:
a) He will bring 1,00,000 for his capital and will get 1/10th share in the profits
b) He will bring necessary cash for his share of goodwill premium. The goodwill of the firm was valued at
3,00,000.
c) A liability of 18,000 will be created against bills receivables discounted.
d) The value of stock and furniture will be reduced by 20%.
e) The value of land and building will be increased by 10%
f) Capital account of the partners will be adjusted on the basis of Hanuman’s capital in their profit-sharing
ratio by opening current accounts.
Prepare revaluation account and partners’ capital accounts.
Q.3) Ashish and Nimish were partners in a firm sharing profits and losses in the ratio of 3:2. On 31st March,
2019, their Balance Sheet was as follows:

Liabilities Amount Assets Amount

Capital A/c Plant and Machinery 2,90,000
Ashish 3,10,000 Furniture 2,20,000
Nimish 2,90,000 6,00,000 Debtors 90,000
General Reserve 50,000 Less : PFDD 1,000 89,000
Workmen Compensation Fund 20,000 Stock 1,40,000
Creditors 1,10,000 Cash 41,000
7,80,000 7,80,000
On 1st April, 2019, Geeta was admitted into the partnership for 1/4th share in the profits on the following
terms:
a) Goodwill of the firm was valued at 2,00,000
b) Geeta brought 3,00,000 as her capital and her share of goodwill premium in cash
c) Bad debts amounted to 2,000. Create a provision for doubtful debts @5% on debtors
d) Furniture was found undervalued by 65,400
e) Stock was taken over by Nimish for 1,30,000
f) The liability against workmen’s compensation fund was determined at 30,000
g) After the above adjustments the capital of Ashish and Nimish were to be adjusted taking Geeta’s Capital
as the base. Excess or Shortage was to be adjusted by Opening Current Accounts.
Prepare Revaluation Account, Partner’s Capital Accounts and the Balance Sheet of the Firm after Geeta’s
admission.
Thank you
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PART 9
ADJUSTMENT OF CAPITAL (CASE 2)
Q.4) X and Y are partners sharing profit and losses in the ratio of 3:2. the capital of X and Y after adjustment
are 80,000 and 60,000 respectively. They admit Z as a third partner who is to be contribute proportionate
capital to acquire a 1/5th share of total capital of the new firm equally from both the partners X and Y.
Calculate capital to be brought in by Z. also Pass Journal entries.
Q.5) A, B and C were partners in a firm sharing profits in the ratio of 3:2:1. On 31st March, 2015 their
Balance Sheet was as follows:
Liabilities Amount Assets Amount
Creditors 84,000 Bank 17,000
General reserve 21,000 Debtors 23,000
Capital Stock 1,10,000
A 60,000 Investments 30,000
B 40,000 Furniture and fittings 10,000
C 20,000 1,20,000 Machinery 35,000
2,25,000 2,25,000
On the above date D was admitted as a new partner and it was decided that:
i) The new profit-sharing ratio between A, B and C and D will be 2:2:1:1.
ii) Goodwill of the firm was valued at 90,000 and D brought his share of goodwill premium in cash.
iii) The market value of investment was 24,000
iv) Machinery will be reduced to 29,000
v) A creditor of 3,000 was not likely to claim the amount and hence to be written off.
vi) D will bring proportionate capital so as to give him 1/6th share in the profits of the firm.
Prepare Revaluation Account, Partner’ Capital Account.
Q.6) On 31st March 2019 the balance sheet of Madan and Mohan who share profits and losses in the ratio of
3:2 was as follows:
Liabilities Amount Assets Amount
Creditors 28,000 Cash at bank 10,000
General reserve 10,000 Debtors 65,000
Employee provident fund 22,000 Less PFDD (5,000) 60,000
Capital of Madan 60,000 Stock 33,000
Capital of Mohan 40,000 patents 57,000
1,60,000 1,60,000
They decided to admit Gopal on 1st April,2019 for 1/5th share which Gopal acquired wholly from Mohan on
the following terms:
a) Gopal shall bring 10,000 as his share of premium for goodwill
b) A debtors whose due of 3,000 were written off as bad debt paid 2,000 in full settlement
c) A claim of 5,000 on account of workmen’s compensation was to be provided for
d) Patents were undervalued by 2,000. stock in the books was valued 10% more than its market value
e) Gopal was to bring in capital equal to 20% of the combined capital of Madan and Mohan after all
adjustment.
Prepare revaluation account and capital account of the partners.
Thank you
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