Chapter 3.

Admission of partner

1. 1.X and Y are partner sharing profit and losses in the ratio of 3:2. They admit Z as a new partner
who get 1/5th share. Calculate the new profit sharing ratio in each of the following.
 If Z acquire his share from X and Y in the Profit sharing ratio.
 If he acquire 3/20th from X and 1/20th from y
 If he acquire 1/10 from X and 1/10th from Y
 If he acquire 1/20th from X and 3/20th from Y
 If he acquire his share entirely from X
 If he acquire his share entirely from Y

2. A and B share profits and losses in the ratio of 3:2 . They admit C as a new partner for 1/3rd share
in the profit of the firm which he acquire from A and B in the ratio of 2:3. After some time they
admitted D as a new partner for 1/5th shares in the profit which he acquired equally from A and
C.
Calculate
 New profit sharing profit of A,B and C,
 New profit sharing ratio of A, B, C and D.

3. .A,B and C are partner in a firm sharing profit in 4:3:3 ratio. They decided to admit their manager
D into partnership. A surrendered 1/4 Of his share in favour of D, B surrendered 1/5 of his share
in favour of D and C surrendered 1/6 of his share in favour of D. Calculate New profit sharing
ratio.
4. P and Q share profits in 3:2. On 1st April, 2022 they admit R and S with 1/4 and 1/5 shares
respectively. The profit of the firm for the year ended 31st March 2023 amounted to 200000.
Prepare necessary journal entries for the distribution of profit.

5. L,M,and ,N are partner sharing profit in the ratio of 3:2:1. They admit O unto partnership. O bring
in cash 450000 as capital and 150000 as Goodwill for 1/5th share of profit. Pass necessary entries and
find out new profit sharing ratio when :

 Goodwill is retained in the firm.

 Goodwill is withdrawn by old partners.
6. X and Y are partner sharing profit in the ratio of 4: 3. Z joins partnership for 2/7th share in the
profit ( of which he acquire 3/4th from X and 1/4th from Y). Z bring in 300000 for his capital and
120000 for Goodwill. Half of the amount of Goodwill is withdrawn by the old partners.

Pass necessary journal entries and find out new profit sharing ratio.

7. Ram and Rahim are partner in a firm sharing profit in the ratio of 3:2. On April 1,2021 they admit Raj
as a new partner for 3/13th share in the profit. The new ratio will be 5:5:3. Raj contributed the following
asset toward his capital and for his shares of Goodwill: Land 250000, plant and Machinery 150000, stock
80000 and Debtors 70000. On the date of admission of Raj the Goodwill of the firm was valued at
520000. Record necessary journal entries in the book of the firm.
8. A and B are partner sharing profit and losses in 3:2. They admit C into partnership for 1/5
share in the profit. C pays in cash 40000 for his capital. Goodwill of the firm is valued at 25000
but C is unable to bring his shares of Goodwill in cash. Pass necessary journal entries .

9.A and B are partners in a firm sharing profit and losses in the ratio of 3:2. C is admitted for 1/5th
shares of profit of the firm which he acquire equally from A and B. Goodwill of the firm is valued
at 100000. However C is unable to bring his share of Goodwill in cash. Pass entries when:

 No Goodwill account is to be raised

 Goodwill A/C is to be raised and written off immediately.

10.A and B are partner in a firm sharing profit and losses in the ratio of 3:2. They admit C into
partnership for 1/3rd share of profit. C bring capital of 200000. Goodwill is valued at 150000.
Show what entries shall be made in the following cases:

 Goodwill does not appear in the books

 Goodwill appear in the book at 90000.
 Goodwill appear in the book at 180000.

11. A and B are partner sharing profit in the ratio of 3:1. C is admitted as a partner with 2/9th
shares. A and B will in future get 4/9th and 3/9th share of profit. C pays 200000 for Goodwill. Pass
the necessary journal entries.

12. Pass journal entries to record the following transactions on the admission of a new partner:

i. Land and building is under valued by 2,00,000.

ii. Stock is overvalued by 20% {book value of stock 60,000 }

iii. Provision to be made for compensation of 20,000 to an ex-employee.

iv. Sundry debtors appeared in the books at 1,50,000. They are estimated to produce not
more than 1,30,000.

v. Creditors include an amount of 10,000 received as commission.

vi. A bill of exchange of 40,000 which was previously discounted with the banker ,was
dishonored on 31st march, 2022 but no entry has been passed for it.

vii. Value of machinery is to be decreased to 1,20,000(Book value 2,00,000)

viii. Value of machinery is to be decreased by 1,20,000 (Book value 2,00,000)

ix. Expenses on revaluation amount to 8,000 have been paid by partner X.

13. X and Y are partners in a firm. On 1st April, 2023, they admitted Z as a partner and new profit
sharing ratio is agreed at 3:2:1. Their balance sheet disclosed ‘Workman Compensation Reserve’
amounting to 1,00,000 on this date. Show the accounting treatment, if
(i) Claim for Workman Compensation is estimated at 1,20,000.
(ii) Claim for Workman Compensation is estimated at 90,000.
14. A,B and C are partners sharing profits in 2:2:1. On 1st April , 2023, they admitted Z for 1/4th
share. On the date of admission, the following items appeared in their Balance Sheet:

General reserve 1,50,000

Workman Compensation Reserve 40,000
Profit & Loss A/c (Cr.) 60,000
Advertisement Suspense A/c (Dr.) 25,000

Pass necessary journal entries

15. A and B sharing profits and losses in the ratio of 3:2 decide to admit C for 1/3rd share. On
their Balance Sheet disclosed the following items :

Investment Fluctuation Reserve 40,000

Investment (at cost) 3,00,000
Show the accounting treatment in the following cases:
Case (i) If the market value of investments is 2,90,000
Case (ii) If the market value of investments is 2,45,000
Case (iii) If the market value of investments is 3,00,000
Case (iv) If the market value of investments is 3,25,000

16. Hemant and Nishant were partners in a firm sharing profits in the ratio of 3:2. Their capitals
were 1,60,000 and 1,00,000 respectively. They admitted Somesh on 1st April, 2021 as a new
partner for 1/5 share in the future profits. Somesh brought 1,20,000 as his capital. Calculate the
value of goodwill of the firm and record necessary journal entries for the above transactions on
Somesh’s admission.

17. Asin and shreya 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 the total assets of
the firm was 15,00,000 and outside liabilities were valued at 5,00,000 on that date. Give the
necessary Journal entry to record goodwill at the time of Ajay’s admission. Also show your
workings.

18. A,B and C were partners in the firm sharing profits in the ratio of 2:1:1. Their respective
capitals were A 3,00,000 ; B 2,00,000 and C 1,80,000. On 1st April, 2022 they admitted D as a new
partner. D brought 2,00,000 for his capital and necessary amount for his share of goodwill
premium. The new profit sharing ratio between A,B,C and D will be 1:2:1:1.
Pass necessary journal entries for the above transactions in the books of the firm on D’s
admission.
 19. Following is the Balance Sheet of X and Y who share profits and losses in the ratio of 3:2 as at
31st March,2022:

On 1st April 2022 ,Z is admitted as a new partner. X surrenders 1/3rd of his share and Y surrenders
1/4th of his share in favor of Z. Z brings in 3,60,000 for his share of Capitals. Pass journal entries
for recording goodwill.

20. X and Y are partners sharing profits in the ratio of 2:1. Their balance sheet as at 31st
March,2022 was as follows:

They admit Z into partnership from 1st April, 2022 on the following terms:

 Z brings in 40,000 as his capital and he is given 1/4th share in profits.

 Z brings in 15,000 for goodwill, half of which is withdrawn by old partners.
 Investments are valued at 10,000. X takes over Investments at this value.
 Typewriter is to be depreciated by 20% and fixed Assets by 10%.
 An old customer, whose account was written off as bad debts, has promised to pay 1,000.
 By bringing in or withdrawing cash , the capitals of X and Y are to be made proportionate to that
of Z on their profit sharing basis.

Pass Journal entries, prepare capital accounts and new B/S of the firm.
21. A and B are partners sharing profits in the ratio of 2:1. Following items appeared in their Balance
Sheet as at 31st March, 2022:

A’s Capital 48,000; B’s Capital 30,000; Creditors 15,000; Bank balance 5,000; Debtors 20,000; Machinery
36,000; Stock 44,000.

They admit C into partnership on 1st April, 2022 with 1/6th share in profits, which hi acquires equally from
A and B. He brings in 20,000 as his capital and 18,000 as goodwill in cash.

Following revaluations were made:

 5% provision be made for doubtful debts on Debtors and a provision of 2% be made on Debtors
and Creditors for discount.
 1,000 are prepaid for insurance.
 5,000 are outstanding for salaries.
 1,480 for accrued income are to be shown in the books.
 Investments for 6,000 have been omitted to be recorded in the books.

A and B decide to have their capitals in proportion to their share in profits, based on C’s share. Any
excess of capital was to be withdrawn and deficit to be paid in cash.

Prepare the partner’s capital accounts and give the new balance sheet of the firm.

22. A and B are partners in a firm sharing profits and losses in the ratio of 3:2. Their balance sheet as at
1st April, 2022 was as follows:

C is admitted as partner on the above date on the following terms:

 He will pay 10,000 as goodwill for one-fourth share in the profits of the firm.
 The assets are to be valued as under:

Plant at 32,000; Stock at 18,000; Debtors at book figure less a provision of 5 per cent for Bad Debts.

 It was found that the creditors include a sum of 1,400 which was not to be paid. But it was also
found that there was a liability for compensation to workers amounting to 2,000.
 C was to introduce 20,000 as capital and the capitals of other partners were to be adjusted in the
new profit sharing ratio. For this purpose, current accounts were to be opened.
Give journal entries to record the above and Balance sheet after C’s admission.(Ledger A/c not required)

23. Following is the Balance Sheet of Amit and Vidya as at 31st March, 2021:

On the above date, Chintan was admitted as a partner for 1/4th share in the profits of the firm with the
following terms:

 2,900 will be written off as Bad Debts.

 Stock was taken over by Vidya at 35,000.
 Goodwill of the firm was valued at 40,000. Chintan brought his share of goodwill premium in
cash.
 Chintan brought proportionate capital and the capitals of the other partners were adjusted on
the basis of Chintan’s Capital. For this necessary cash was to be brought in or paid off to the
partners as the case may be.

Prepare Revaluation Account and Partners Capital Accounts.