Admission of A Partner - Work Sheet No .3

Comprehensive questions ©David Thomas
I . No Capital adjustments
1. Goodwill brought in by the new partner

Q.1 Balance sheet of A and B Sharing in the ratio of 3:2 as on 31st Mach 2022
Liabilities Amount Assets Amount
A Capital 50,000 Machinery 40,000
B Capital 40,000 Stock 30,000
General reserve 30,000 Debtors 22,000
WCR 15,000 Less Provision (2000) 20,000
EPF 10,000 Building 90,000
Creditors 14,000 DRE 10,000
12 % Bank loan 50,000 Cash 19,000
219,000 219,000
Adjustments :
1. C brings Rs. 30,000 as capital for 1/6th share and Rs. 10000 as his share of goodwill,
Old partners withdrew half of the goodwill
2. Maintain the reserve for bad doubtful debts at 10 %
3. Depreciate machinery by 20 %
4. Stock valued at Rs. 35,000
5. Creditors allowed a discount of 5%
6. WCR decided at Rs. 12,000
Prepare revaluation, Capital accounts and balance sheet and Pass Journals
Q 2 Balance sheet of A and B Sharing in the ratio of 2:1 as on 31st Mach 2022
A Capital 80,000 Building 40,000
B Capital 40,000 Inventory 30,000
Reserve fund 30,000 Debtors 22,000
WCR 15,000 Less Provision (2000) 20,000
Creditors 10,000 Machinery 90,000
12 % Bank loan 50,000 Profit and loss (dr) 10,000
Cash 35,000
225,000 225,000
Adjustments :
1. C brings Rs. 50,000 as capital for 1/ 4th share and Rs. 15000 as his share of goodwill
2. Inventory valued at Rs. 35,000
3. Machinery valued at Rs. 80,000
4. RBD no longer necessary
5. Bank loan interest due
6. WCR decided at Rs. 18,000
7. Building value increased by Rs. 20000
Q3
Q.4 Balance sheet of A and B Sharing in the ratio of 2:1 as on 31st Mach 2022
Capital Accounts Freehold property 20,000
A 60,000 Furniture 6,000
B 30,000 90,000 Stock 12,000
General reserve 24,000 Debtors 80,000
Creditors 16,000 Investments 25,000
Outstanding Salaries 8,000 Deferred Revenue Expenditure 12,000
Employees Provident fund 5,000 Cash 5,000
Investment Fluctuation fund 12,000
Reserve for Bad debts 5,000
160,000 160,000
Adjustments :
1. C brings Rs. 15,000 as capital for 1/4th share and Rs. 6000 as his share of goodwill,
partner withdrew half of the goodwill
2. Maintain the reserve for bad doubtful debts at 10 %
3. Property was overvalued by 25%
4, Stock was undervalued by 20 %
5. Depreciate furniture at 10 %
6. X. customer of Rs. 10,000, whose account was written off as bad debts in the last year
paid Rs. 6,000 now
7.Creditors Rs. 2,000 will be written back
8. Market value of investments 22,000.
9. Outstanding salaries increased to Rs. 8,400
Q5
Q6.A, B and C are equal partners in a firm, their Balance Sheet as on 31st March 2018 :
Liabilities Rs Assets Rs
Sundry Creditors 27,000 Goodwill 1,17,000
Employees’ Provident Fund 6,000 Buildings 1,25,000
Bills Payable 45,000 Machinery 72,000
General Reserve 15,000 Furniture 24,000
Capitals: Stock 1,14,000
A 2,17,000 Book debts 109,000 1,02,000
B 1,66,000 Less RBD 7,000
C 90,000 Cash 12,000
5,66,000 5,66,000
On that date they agree to take D as equal partner on the following terms:
(a) D should bring in Rs 1,60,000 as his capital and goodwill. His share of goodwill is
valued at Rs 60,000.
(b) Goodwill appearing in the books must be written off.
(c) Provision for loss on stock and doubtful debts is to be made at 10% and 5% .
(d) Bad debts from the debtors Rs.12,000
(e) EPF increased to Rs. 8,000
(f) Machinery overvalued by Rs. 12,000 and Building undervalued by Rs. 25,000
Prepare Revaluation account, Capital account and Balance sheet
2. Goodwill not brought in by the new partner

Q7. The following is the Balance sheet of A and B :
Capitals A 60,000 Land 60,000
B 40,000 Building 30,000
General Reserve 50,000 Stock 10,000
P/L 1,00,000 Debtors 21,000
Workman compensation 5,000 -RBD -1,000 20,000
Employees Provident Fund 4,000 B/R 5,000
Creditors 2,000 Investments 80,000
Cash 26,000
Goodwill 30,000
2,61,000 2,61,000
A and B are partners in the ratio of 3:2. C is admitted for 1 / 6th Share
1. C brings his Capital as Rs. 2,00,000
2. All Debtors are good.
3. Land appreciate by 20 % and Buildings depreciate by 10%
4. Creditors allow a discount of 10%
5. Market value of investments Rs.70,000
6. WCF is to be maintained at Rs. 4,000
7. Stock is revalued at Rs. 8,000
8. Goodwill of the firm valued at Rs. 120,000
Prepare Revaluation account, Capital accounts and New Balance sheet and Pass Journals
Q.8 A and B who share profits & losses in the ratio of 3:1 as at 31st March, 2022
Liabilities Rs Assets Rs
Sundry Creditors 40,000 Cash at Bank 3,500
Employees’ Provident Fund 4,100 Bills Receivable 22,000
Profit & Loss A/c 3,000 Debtors 17,000
Contingency Reserve 1,000 Less: Provision 1,000 16,000
General Reserve 1,000 Stock 60,000
A’s Capital 74,550 Furniture & Fixtures 11,000
B’s Capital 64,850 Land & Buildings 75,000
Advertisement Expenditure 1,000
1,88,500 1,88,500
On 31st March 2022, ‘C’ was admitted into partnership on the following terms:
(a) The new profit sharing ratio of A,B and C will be 3:1:1.
(b) C brought Rs. 30,000 as capital and nothing for his goodwill
(c) Goodwill of the firm was to be valued at two and half years’ purchase of the average profits
of the last four completed years. The profits were – 2018 Rs 20,000, 2019 Rs 30,000, 2020
Rs 50,000, 2021 Rs 47,000.
(d) The Stock was found overvalued by Rs 6,000 and Fixtures are to be brought down to Rs
9,990.
(e) Provision for doubtful debts is to be made up to 5% on the debtors and bills receivable.
(f) Land & Building was found undervalued by Rs 15,000.
(g) That unaccounted accrued incomes of Rs 850 be accounted for.
(h) That a claim on account of workmen’s compensation for Rs 150 be provided for.
(i) That Mr X, an old customer whose account for Rs 1,000 was written off as bad has promised
in writing to pay 65% in settlement of his full debt.
Required: Prepare Revaluation Account, Partners’ Capital Accounts and the Balance Sheet
3. Part of the goodwill brought in by the new partner

Q. 9 Balance sheet of ABC on 31st March 2021 sharing the ratio of 5:3:2
Capitals Cash 64,000
A 60,000 Buildings 10,000
B 40,000 Stock 5,000
C 20,000 Machinery 10,000
General Reserve 30,000 Furniture 7,000
Creditors 5,000 Debtors 16,000
Bills Payable 1,000 -RBD -1,000 15,000
Land 25,000
Goodwill 5,000
Profit and loss Debit 15,000
156,000 156,000
Adjustments:
1. Reserve for Bad Debts at 15 %
2. Bad debts Rs. 800 .
3. Land appreciated by Rs 15,000.
4. Stock revalued to Rs.9,000.
5. Machinery undervalued by Rs. 6,000.
6. Rs. 1000 Creditors written back .
7. Depreciate Building at 20%
8. D admitted for 1/12th share and brought Rs. 50,000 as Capital and his 40 % of
share of goodwill
9. Goodwill valued at Rs. 480,000
Prepare revaluation account capital account and balance sheet
Q 10
Q 11.Hidden goodwill
Q 12 .Current account in comprehensive sums

Q 13.
©David Thomas

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Comprehensive questions ©David Thomas

1. Goodwill brought in by the new partner

2. Goodwill not brought in by the new partner

3. Part of the goodwill brought in by the new partner

Q 12 .Current account in comprehensive sums

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