Practice of admission of a partner

SARVANAMAN VIDYA MANDIR
ADMISSION OF A PARTNER XII Com, Accountancy
Q.1.A & B are partners sharing in the ratio of 3:2. C is admitted. C gets 3/20th from A and 1/20th from B.
calculate new and sacrifice ratio
Q.2.X & Y are partners share profits in the ratio of 5:3. Z the new partner gets 1/5 of X’s share and 1/3rd of
Y’s share. Calculate new ratio.
Q.3. P & Q are partners sharing in the ratio of 5:3. They admit R for 1/4th share and agree to
share between them in the ratio of 2:1 in future. Calculate new ratio.
Q.4. A and B share profits and losses in the Ratio of 4:3, they admit C with 3/7th share; which he
gets 2/7th from A and 1/7 from B. What is the new profit sharing ratio?
Q.5 A business has earned average profit of Rs. 60,000 during the last few years. The assets of the business
are Rs. 5,40,000 and its external liabilities are Rs. 80,000. The normal rate of return is 10%. Calculate the
value of goodwill on the basis of capitalisation of super profits.
Q.6 The capital of a firm of Arpit and Prajwal is Rs. 10,00,000. The market rate of return is 15% and the
goodwill of the firm has been valued Rs. 1,80,000 at two years purchase of super profits. Find the average
profits of the firm.
Q.7 The average profits for last 5 years of a firm are Rs. 20,000 and goodwill has been worked out Rs.
24,000 calculated at 3 years purchase of super profits. Calculate the amount of capital employed assuming
the normal rate of interest is 8 %.
Q.8 Rahul and Sahil are partners sharing profits together in the ratio of 4:3. They admit Kamal as a new
partner. Rahul surrenders 1/4th of his share and Sahil surrenders 1/3rd of his share in favour of Kamal.
Calculate the new profit sharing ratio.
Q.9 Ajay and Naveen are partners sharing profits in the ratio of 5:3. Surinder is admitted in to the firm for
1/4th share in the profit which he acquires from Ajay and Naveen in the ratio of 2:1. Calculate the new profit
sharing ratio.
Q.10 A and B were partners sharing profits in the ratio of 3:2. A surrenders 1/6th of his share and B
surrenders 1/4th of his share in favour of C, a new partner. What is the new ratio and the sacrificing ratio.
Q.11 Aarti and Bharti are partners sharing profits in the ratio of 5:3. They admit Shital for 1/4th share and
agree to share between them in the ratio of 2:1 in future. Calculate new and sacrificing ratio.
Q.12 X and Y divide profits and losses in the ratio of 3:2. Z is admitted in the firm as a new partner with
1/6th share, which he acquires from X and Y in the ratio of 1:1. Calculate the new profit sharing ratio of all
partners.
Q.13 Rakhi and Parul are partners sharing profits in the ratio of 3:1. Neha is admitted as a partner. The new
profit sharing ratio among Rakhi, Parul and Neha is 2:3:2. Find out the sacrificing ratio.
Q.14 X and Y are partners sharing profits in the ratio of 5:4. They admit Z in the firm for 1/3rd profit, which
he takes 2/9th from X and 1/9th from Y and brings Rs. 1500 as premium. Pass the necessary Journal entries
on Z’s admission.
Q.15 Ranzeet and Priya are two partners sharing profits in the ratio of 3:2. They admit Nilu as a partner,
who pays Rs. 60,000 as capital. The new ratio is fixed as 3:1:1. The value of goodwill of the firm was
determined at Rs. 50,000. Show journal entries if Nilu brings goodwill for her share in cash.
Q.16 A and B are partners sharing profits equally. They admit C into partnership, C paying only Rs. 1000
for premium out of his share of premium of Rs. 1800 for 1/4th share of profit. Goodwill account appears in
the books at Rs. 6000. All the partners have decided that goodwill should not appear in the new firms books.
Q.17 A and B are partners sharing profits in the ratio of 3:2. Their books showed goodwill at Rs. 2000. C is
admitted with 1/4th share of profits and brings Rs. 10,000 as his capital but is not able to bring in cash
goodwill Rs. 3000. Give necessary Journal entries.
Q.18 Piyush and Deepika are partners sharing in the ratio of 7:3. they admit Seema as a new partner. The
new ratio being 5:3:2. Pass journal entries.

Q.19 A and B are partners with capital of Rs. 26,000 and Rs. 22,000 respectively. They admit C as partner
with 1/4th share in the profits of the firm. C brings Rs. 26,000 as his share of capital. Give journal entry to
record goodwill on C’s admission.
Q.20 A and B are partners sharing profits in the ratio of 3:2. They admit C into partnership for 1/4th share. C
is unable to bring his share of goodwill in cash. The goodwill of the firm is valued at Rs. 21,000. give
journal entry for the treatment of goodwill on C’s admission.
Q.21 A and B are partners with capitals of Rs. 13,000 and Rs. 9000 respectively. They admit C as a partner
with 1/5th share in the profits of the firm. C brings Rs. 8000 as his capital. Give journal entries to record
goodwill.
Q.22 A, B and C were partners in the ratio of 5:4:1. On 31st Dec. 2006 their balance sheet showed a reserve
fund of Rs. 65,000, P&L A/C (Loss) of Rs. 45,000. On 1st January, 2007, the partners decided to change
their profit sharing ratio to 9:6:5. For this purpose goodwill was valued at Rs. 1,50,000.
The partners do not want to distribute reserves and losses and also do not want to record
goodwill. You are required to pass single journal entry for the above.
Q.23 A and B were partners in the ratio of 3:2. They admit C for 3/13th share. New profit ratio after C’s
admission will be 5:5:3. C brought some assets in the form of his capital and for the share of his
goodwill.Following were the assets:
Assets Rs.
Stock 2,44,000
Building 2,40,000
Plant and Machinery 1,40,000
At the time of admission of C goodwill of the firm was valued at Rs. 12,48,000.Pass necessary journal
entries.
Q.24 X, Y and Z are sharing profits and losses in the ratio of 5:3:2. They decide to share future profits and
losses in the ratio of 2:3:5 with effect from 1st April, 2002. They also decide to record the effect of the
reserves without affecting their book figures, by passing a single adjusting entry.
Book Figure
General Reserve Rs. 40,000
Profit 2 loss A/C (Cr) Rs. 10,000
Advertisement Suspense A/C(Dr) Rs. 20,000
Pass the necessary single adjusting entry.

1. Akbar and Birbal are partners in a firm sharing profits in the ratio of 5:3 . Chatur joins the firm.
A surrenders 1/4th of his share and B surrenders 1/5th of his share in favour of C. Find the new profit
sharing ratio.
2. A and B are partners in a firm sharing profits in the ratio of 2:1. C joins the firm. A surrenders
1/4th of his share and B surrenders 1/5th of his share in favour of C. Find the new profit sharing ratio.
3. P and Q were partners in a firm sharing profits in the ratio of 3:2. On 10.3.2014, they admitted R
as a new partner in the firm for 3/13 share in the profits. The new profit sharing ratio will be 5:5:3 . R
contributed the following assets towards his capital and for his share of goodwill.(premium)
Stock Rs. 40,000, Debtors Rs. 60,000, Land Rs. 1,00,000and Plant and Machinery Rs. 60,00. On the
date of admission of R the goodwill of the firm was valued at Rs. 520,000, which is not appear in the
books. Pass necessary journal entries in the books of the firm on admission of R. Show calculations
clearly.
4. Ekta and Faruk were partners in a firm sharing profits in the ratio of 3 : 1. They admitted Gaurav
as a new partner on 1-3-2013 for 1/3rd share. It was decided that now they will share profits equally.
Gaurav bought Rs. 50,000 in cash and machinery of Rs. 70,000 for his share in profit as a premium
for goodwill. Showing your calculations clearly, pass necessary journal entries in the book of the
firm.
5. A and B are partners with a capital of Rs. 5,00,000 and Rs. 2,50,000 respectively. They admitted
C as new partner on 30-09-2011. After providing interest on capital @ 10% p.a. the profits are
divisibleas follows:
A ½, B 1/3 and C 1/6. But A and B have guaranteed that C’s share in the profit shall not be less than
Rs. 26,000 in a year. The net profit for the year ending 31st March, 2012 is 2,00,000 before charging
interest on capital. Give journal entries and prepare profit and loss appropriation account.
6. K, L and M are partners sharing profits and losses in the ratio of 3: 2: 5. They admit N for 1/6
share. M would retain his original share. Find new profit sharing ratio and sacrifice ratio.
7. P and Q are partners sharing profits in the ratio of 3:2. They admitted Marry as a new partner for
¼ share. The new profit sharing ratio between P and Q will be 2:1. Calculate their sacrificing ratio.
8. Verma and sharma are partners in a firm sharing profits and losses in the ratio of 5:3. They
admitted Ghosh asa new partner for 1/5 share of profits. Ghosh is to bring in Rs. 20,000 as capital
and Rs. 4,000 as his share of goodwill premium. Give journal entries:
a. When the amount of goodwill is retained in the business.
b. When 40% of the amount of goodwill withdrawn.
9. H and N are partners in a firm sharing profits in the ratio of 3:2. Their capitals were Rs. 80,000
and Rs. 50,000 respectively. They admitted S as a new partner for 1/5 share in the future profits. S
brought Rs. 60,000 as his capital. Calculate the value of goodwill of the firm and record necessary
journal entries on S’s admission.
10. Anil and vishal are partners sharing profits and loss in the ratio of 6 : 4. They admitted Sanjay as
a new partner for 1/5thshare in the future profits of the firm. Calculate the new profit sharing ratio of
Anil, Vishal and Sanjay.
11. Akshay and Bharat are partners sharing profits in the ratio of 3:2. They admitted dipak as a new
partner for 1/5th share in the furtureprofits of the firm which he gets equally from Akshay and
Bharat. Calculate new profit sharing ratio of partners.
12. Anshu andNitu are opartners sharing profits in the ratio of 3 : 2. They admitted Jyoti as a new
partner for 3/10th share which she acquired 2/10 from Anshu and 1/10 from Nitu. Calculate the new
profit sharing ratio of Anshu, Nitu and Jyoti.

13. Ram and Shyam are partners in a firm sharing profits in the ratio of 3:2. They admitted Ganesh
as a new partner. Ram surrenders ¼ of his share and Shyam 1/3 of his share in favour of Ganesh.
Calculate new profit sharing ratio of partners.
14. Das and Sanatan are partners in a firm sharing profits in 4:1 ratio. They admitted Sanskrit as a
new partner for 1/4th share in the profits, which he acquired wholly from Das. Determine the new
profit sharing ratio of the partners.
15. Ram and Mohan are partners in a firm sharing profits in the ratio of 5:3. They admitted Bajrang
as anew partner for 1/7th share in the profit. The new profit sharing ratio will be 4:2:1. Calculate the
sacrificing ratio of Ram and Mohan.
16. Sita and Geeta are partners in a firm sharing profits in the ratio of 3:2. They admitted Kavita as
a new partner for 1/4th share. The new profit sharing ratio between Sita and Geeta will be 2:1.
Calculate the sacrificing ratio.
17. Raghuvir and Survir are partnes in a firm sharing profits in the ratio of 4:3. They admitted
Balvir as a new partner. The profit sharing ratio of Raghuvirand Survir will be 2:3:1. Calculate the
gain or sacrifice of old partners.
18. The profits for the last five years of a Partnership firm wee as follow.
YEAR PROFIT
2002
2003
2004
2005
2006
400000
398000
450000
445000
500000
Calculate goodwill of the firm on the basis of 5 years of
purchase of av., profit.
19. The profits of firm for the last five years wee as follow:
YEAR PROFIT
2002-03
2003-04
2004-05
2005-06
2006-07
20,000
24,000
30,000
25,000
36,000
Calculate goodwill of the firm on the basis of three years of purchase
of weighted average profit based on weight 1,2,3,4 and 5 respectively
to the profits for 2002 to 2006.
for 2002
20. Calculate the goodwill of the firm on the basis of three year’s purchase of the weighted average
profits of the last four years. The profits of the last four years were 2003 Rs. 20,200:, 2004 Rs.
24,800:, 2005 Rs. 40,000 and 2006 Rs. 30,000.
You are supplied the following additional information:
a. On September 1, 2005 a major plant repair was undertaken for Rs. 6,000 which was
charged to revenue. The said sum is to be capitalized for goodwill calculation subject to
adjustment of depreciation of 10% p.a on reducing balance method.
b. The closing stock for the year 2004 was overvalued by Rs. 2,400.
c. To cover the management cost an annual charge of Rs. 4,800 should be made for the
purpose of goodwill.

21. The books of a business showed that the capital employed on December 31, 2006 . Rs. 5,00,000
and the profits for the last five years were: 1997-Rs. 40,000; 1998- Rs. 50,000: 1999- Rs. 55,000 ;
2000- Rs. 70,000 and 2001- Rs. 85,000.
You are required to find out the value of goodwill based on three years purchase of the super profits
of the business, given that the normal rate of return is 10%.
22. The capital of the firm of A and B is Rs. 10,00,000 and the market rate of interest is 15%. Annual
salary to partners is 8,000 each. The profits for the last three years were Rs. 60,000: Rs. 72,000 and
Rs. 58,000. Goodwill is to be valued at two years purchase of the last 3 years’ average super profits.
Calculate the goodwill of the firm.
23. A business has earned average profits of Rs. 1,00,000 during the last few years and the normal
rate of return in a similar business is 20%. Ascertain the value of goodwill by capitalization of
average profits method, given that the value of net assets of the business is Rs. 8,20,000.
24. The goodwill of the firm is Rs. 18,000, the capital employed of the firm is Rs. 1,00,000 and the
normal rate of return is 10%. The average profits for the last 5 years are Rs. 12,000 and the goodwill
is to be worked out at 3 years purchase of super profits.
iii. this firm earns an average profit of Rs. 30,000 with capital of Rs. 2,00,000. The normal rate of
return in the business is 10%. Using capitalization of super profits method work out the value of the
goodwill of the firm.
25. Sunil and Dilip are partners in a firm sharing the profit and losses in the ratio of 10:6. Sachin is
admitted in the firm for 1/5th share of profits. He is to bring in Rs. 20,000 as capital and Rs. 4,000 as
his share of goodwill. Give necessary journal entries when the amount of goodwill is retained in the
business.
26. S and D are partners in a firm sharing the profit and losses in the ratio of 5:3. Sachin is admitted
in the firm for 1/5th share of profits. He is to bring in Rs. 50,000 as capital and Rs. 8,000 as his share
of goodwill. Give necessary journal entries when the amount of goodwill is fully withdrawn by the
partners.
27. S and D are partners in a firm sharing the profit and losses in the ratio of 4:6. Sachin is admitted
in the firm for 1/5th share of profits. He is to bring in Rs.1, 20,000 as capital and Rs.604,000 as his
share of goodwill. Give necessary journal entries when the 50% of the amount of goodwill is fully
withdrawn.
28. Vijay and Sanjay are partners in a firm sharing profits and losses in the ratio of 3:2. They decided
to admit Avinash in to the partnership with 1/4th share in the profits. Avinash brings in Rs. 30,000 for
capital and the required amount of premium in cash. The goodwill of the firm is valued at Rs.
40,000. The new profit sharing ratio is 2:2:1. Vijay and Sanjay withdraw their share of goodwill.
Give necessary journal entries.
29. Srikant and Raman are partners in a firm sharing profits and losses in the ratio of 3 : 2. They
decide to admit Venkat in to partnership with 1/3rd share in the profits. Venkat brings in Rs. 40,000
as his capital. He also promises to bring in the necessary amount of goodwill. On the date of
admission, the goodwill has been valued at Rs. 36,000 and the goodwill a/c already appears in the
books at Rs. 24,000. Venkat brings in the necessary amount for his share of goodwill and agrees that
the existing g/w a/c be written off.
30. Srikant and Raman are partners in a firm sharing profits and losses in the ratio of 3 : 2. They
decide to admit Venkat in to partnership with 1/5th share in the profits, which he acquires equally
from Srikant and Raman. Goodwill is valued at Rs. 30,000. Venkat brings in Rs. 16,000 as his
capital but is not able to bring share of goodwill. No goodwill account exists in books of the firm.
Goodwill a/c is to be raised at full value. Pass entries.

31. Ram and Rahim are partners in a firm sharing profits and losses in the ratio of 3 : 2. Rahul is
admitted in to partnership for 1/3rd share in profits. He brings in Rs. 10,000 as capital but is not in a
position to bring any amount for his share of goodwill which has been valued at Rs. 30,000. Give
necessary journal entries when there is no goodwill appearing in the books of the firm.
necessary journal entries when the goodwill appears at Rs. 16,000 in the books of the firm.
necessary journal entries when the goodwill appears at Rs. 36,000 in the books of the firm.
34. A and B are partners sharing profits and losses equally. They admit C in to partnership and the
new ratio is fixed as 4:3:2. C is unable to bring anything for goodwill but brings Rs. 25,000 as
capital. Goodwill of the firm is valued at Rs. 18,000. Give the necessary journal entries assuming
that the partners do not want to show goodwill in the balance sheet.
35. Hem and Nem are partners in a firm sharing profits in the ratio of 3:2. Their capitals were Rs.
80,000 and Rs. 50,000 respectively. They admitted Sam on Jan. 1, 2007 as a new partner for 1/5th
share in the future profits. Sam brought Rs. 60,000 as his capital. Calculate the value of goodwill of
the firm and record necessary journal entries.

36.. Bhim, Jaggu and Chutki are partners sharing profits and losses in the proportion of 5:3:2. On
March 31st, 2012 their Balance sheet was as under.
LIABILITIES AMOUNT
Rs.
ASSETS AMOUNT
Rs.Bills payable
Creditors
General reserves
Capital
Bholu: 36,000
Jaggu : 44,000
Chutki: 52,000
22,000
64,000
14,000
1,32,000
Machinery
Stock
Goodwill
Bills receivable
Debtors
Cash
94,000
44,000
20,000
14,000
42,000
18,000
TOTAL 2,32,,000 TOTAL 2,32,000
They decided to admit Dholu in to the partnership on the following terms:
a. Machinery is to be depreciated by 15%
b. Stock is to be evaluated at Rs. 4,000.
c. Goodwill is to be valued at Rs. 26,000.
d. Outstanding rent is Rs. 1,900.
e. Dholuis to bring Rs. 32,000 towards his capital for 1/6th share and the partners to readjust their
capitals accounts on the basis of their profit sharing ratio. Adjustment of capital to be made in
cash.
Prepare revaluation account, partner’s capital account, cash account and Balance sheet of the
new firm.
37.A and B are partners in a firm sharing profits in the ratio of 2 :1. Their balance sheet as at
31-3-2014 was as follow.
liabilities Rs. Assets Rs.
Bank overdraft
Creditors
Capital
A: 1,80,000
B: 1,70,000
TOTAL
60,000
1,00,000
3,50,000
5,10,000
Cash
Debtors
Stock
Land-building
TOTAL
10,000
1,00,000
2,00,000
2,00,000
5,10,000
On 1-4-2014, C admitted to the firm for 1/4th share on the following terms.
a. He will bring Rs. 1,50,000 as his capital and Rs. 60,000 for his share of goodwill.
b. Land and building is valued at Rs. 2,50,000 and stock at Rs. 1,85,000.
c. Rs. 5000 is provided for doubtful debts.
Prepare Revaluation a/c, Partner’s capital a/cand balance sheet of the firm.
38.The Balance Sheet of W and R who shared profits and losses in the ratio of 3: 2 was as follows
on Jan. 01, 07.
Liabilities Amount Assets Amount
Partner’s capital
W:40,000
R : 30,000
Sundry creditor
70,000
20,000
Sundry debtors
Stock
Plant and
Machinery
Patent
Cash in hand
19,300
25,000
35,000
5,700
5,000
90,000
90,000

On this date B was admitted as a partner on the following conditions:
a. He was to get 4/15 share of profit.
b. He had to bring in Rs 30,000 as his capital.
c. He would pay cash for goodwill which would be based on 2 ½ years purchase of the profits of the
past four years.
d. W and R would withdraw half the amount of goodwill premium brought by B.
e. The assets would be revalued as: Sundry Debtors at book value less a provision of 5%; Stock at
Rs 20,000; Plant and Machinery at Rs 40,000; and Patents at Rs 12,000.
f. Liabilities were valued at Rs 23,000, one bill for goods purchased having been omitted from books.
g. Profits for the past four years were:2003- 15,000, 2004- 20,000, 2005- 14,000, 2006- 17,000.
Give necessary journal entries and ledger accounts to record the above, and prepare the Balance
sheet after admission of B.
39.Ram and Rahim are partners in a firm. They share profits in the ratio of 3 : 2. Their balance sheet
as at 31st March, 2013 was
Liabilities Amount Rs. Assets Amount Rs.
Creditors
Bills payable
Outstanding rent
Capital a/cs
Ram : 3,00,000
Rahim: 1,50,000
1,50,000
80,000
20,000
4,50,000
Plant and machinery
Debtors 2,00,000
Less: provision for
Doubtful debts 20,000
Prepaid expenses
Stock
Bank balance
3,40,000
1,80,000
10,000
50,000
1,20,000
Total 7,00,000 Total 7,00,000
They admitted Prabhu as a new partner on 1st April, 2013 on the following terms:
a. Prabhu will bring in Rs. 2,00,000 as capital and the necessary amount for goodwill.
b. The new profit and loss sharing ratio between the partners would be 5:3:2.
c. The amount of goodwill is to be based on new partner’s share in profits and capital contributed by him.
d. Stock to be depreciated by 10 %.
e. A provision for doubtful debts is to be only Rs. 5,000.
f. Plant and machinery are to be depreciated by 5%.
Prepare revaluation account, bank account, partner’s capital a/cs &Balance sheet of the firm.
40. A and B are partners in a firm. They share profits in the ratio of 3 : 2. Their balance sheet as at
31st March, 2013 was as follows:
Creditors
Bills payable
General reserve
Capital a/cs
Ram : 8,00,000
Rahim: 4,00,000
2,50,000
1,00,000
1,50,000
12,00,000
Goodwill
Cash in hand
Plant and machinery
Debtors
Buildings
Stock
Cash at Bank
50,000
25,000
2,00,000
50,000
5,00,000
3,00,000
5,75,000
Total 17,00,000 Total 17,00,000
They agreed to admit C as a partner with effect from 1st April, 2013 with 1/3rd share on the following
terms:
a. C will bring in Rs. 5,00,000 as his capital and Rs. 2,00,000 as his share of goodwill but he actually
contributed only Rs. 1,20,000 toward goodwill.
b. Building and machinery to be depreciated by 5%.
c. Stock to be revalued at Rs. 4,00,000.
d. There is unrecorded asset worth Rs. 1,20,000.
e. One month salary of Rs. 30,000 is outstanding.
Prepare revaluation account, bank account, partner’s capital a/cs and the balance sheet of the new firm after
the admission of C.

41. Remit and Balkan sharing profits in the ratio of 5:3, had the following balance sheet as at 31st
march 2013.
Creditors
Bills payable
General reserve
Capital a/cs
Remit : 80,000
Balkan: 40,000
20,000
8,000
28,000
1,20,000
Goodwill
Buildings
Plant
Furniture
Debtors
Bills receivables
Stock
Bank balance
30,000
34,000
27,000
4,000
32,500
15,000
22,500
11,000
Total 1,76,000 Total 1,76,000
On 1st
April, 2013 they decided to admit Rahul in to the partnership giving him 1/5th
share. He brought in Rs.
50,000 as his share of capital. The partners decided to revaluate the assets as follows:
Goodwill Rs. 50,000, plant Rs. 25,000, debtors Rs. 31,000, stock Rs. 32,500, Buildings Rs. 40,000, furniture Rs.
2,000 and bills receivables Rs. 12,500.Prepare revaluation account and pass necessary journal entries.
42. Swedish and Swaraj were partners sharing profits equally. Their balance sheet as at 31st March,
2013 was:
Creditors
Bills payable
Outstanding expenses
Capital a/cs
Swedish : 60,000
Swaraj: 40,000
50,000
15,000
3,000
1,00,000
Land and Buildings
Plant and machinery
Furniture
Debtors 20,000
Less: provision for
Doubtful debts 500
cash
Stock
Bank balance
73,500
18,000
10,000
19,500
12,000
20,000
15,000
Total 1,68,000 Total 1,68,000
Pradesh is admitted as a partner from 1st
April, 2013 on the following terms.
a. Pradesh will get 1/5th
share in profits and he will bring in 20,000 as his capital and Rs. 5,000 as his share of
goodwill.
b. Goodwill brought by new partner will be withdrawn by Swedish and Swaraj.
c. The provision for doubtful debts is to be brought up to 5% on debtors.
d. Machinery is to be depreciated by Rs. 2000 and furniture by 12.5 %.
e. Stock to be valued at Rs. 23,000.
f. Land and building is appreciated by 20%.
g. Investments of Rs. 2000 which did not appear in the books should be duly recorded.
Record the necessary journal entries and prepare new balance sheet.
43. Dipak and Ekta were partners in a firm sharing profits in 3:1 ratio. On 1-4-2007, they admitted
Faruk as a new partner for 1/4th share in the firm which he acquired from Dipak. Their Balancesheet
on that date was as follows:
Liabilities Amount Assets Amount
Creditors 54,000 Land and building 50,000
Geneal Reserve 32,000 Machinery 60,000
Capitals:
Dipak: 1,00,000
Ekta : 70,000 1,70,000
Debtors: 40,000
Less: provision for
Bad debt 3,000 37,000
Investment 50,000
Cash 44,000
Stock 15,000
Total 2,56,000 Total 2,56,000

Faruk will bring rupees 40000 as capital and other terms agreed upon were :
a. Goodwill of the firm was valued at rupees 24000.
b. Land and Building were valued at rupees 70000.
c. Provision for bad debts was found to be in excess by rupees 800.
d. A liability for 2000 included in sundry creditors was not likely to arise.
e. The capital of the partners beadjusted on the basis of F’s conribution of capital to the firm.
f. Excess or short fall, if any, to be transferred to current accounts.
Prepare Partners capital acounts, Revaluation account and Balance sheet of the new firm.
44. Sujal and Vijay are partners sharing profits and losses in the ratio 5:3. They admitted Raju
with 1/5th share in the firm. At the time of admission the balance sheet is as under :
BALANCE SHEET AS ON 31ST MARCH 2013
LIABILITIES AMOUNT ASSETS AMOUNT
Sundry Creditors
Bills payable
General reserves
Outstanding salary
Capital accounts :
Vijay : 35,000
Sujal : 55,000
21,000
10,000
8,000
1,000
90,000
Goodwill
Plant &Machinery
Land and building
Stock
Debtors 25,000
Less : Provision for
Doubtful debts 1,500
Investments
Bank
Prepaid insurance
10,000
25,000
30,000
15,000
23,500
14,000
12,000
500
TOTAL 1,30,000 TOTAL 1,30,000
On 1st April, 2013, they decided to admit Raju in to the partnership on the following terms:
a. Raju brings Rs. 25,000 as his share of goodwill and appropriate amount of capital.
b. Land and building and plant and machinery were to be valued at Rs. 35,000 and 30,000 respectively.
c. The provision for bad and doubtful debts was to be maintained up to Rs. 1,000.
d. A liability for Rs. 1,000 included in sundry creditors was not likely to arise.
e. Rs. 10,000 of investments were taken over by old partners in their profit sharing ratio.
f. Vijay is to withdraw Rs. 2,000 in cash.
g. An amount of Rs. 100 is outstanding for repairs.
h. The capitals of the partners were to be adjusted in profit-sharing ratio by opening current account.
Prepare revaluation account, partner’s capital and current accounts and balance sheet after Raju’s
admission.
45. Following is the balance sheet as at 31st March, 2013 of A and B, who shares profits and losses
in the ratio of 3:2 :
Creditors
General reserves
Workmen’s compensation fund
Capital accounts :
A : 10,000
B : 10,000
10,000
15,000
5,000
20,000
Plant &Machinery
Land and building
Stock
Debtors : 12,000
Less : Provision
for doubtful debts 1,000
Cash
10,000
8,000
12,000
11,000
9,000
TOTAL 50,000 TOTAL 50,000
On 1st April, 2013, they decided to admit C in to the partnership on the following terms:
i. The provision for doubtful debts would be increased by 2000.
j. The value of land and building would be increased to 18,000.
k. The value of stock would be increased by 4,000.
l. The liability against the workmen compensation fund is determined at 2000.

m. C brought in as his share of goodwill 10,000 in cash.
n. C would bring in further cash as would make his capital equal to 20 % of the total capital
of the new firm after the above revaluation and adjustments are carried out.
Prepare revaluation account, partner’s capital account and Balance sheet of the new firm.
46. Abhishek and Rajan wee partners in a firm sharing profit in the ratio of 3 : 1. Their Balance
sheet as at 31st March 2012 was as follow:
Creditors
Billls payable
Reserve fund
Outstanding salary
Capital accounts :
Abhishek : 60,000
Rajan : 20,000
30,000
1,000
16,000
3,000
80,000
Patents
Machinery
Stock
Debtors 50,000
Less : Provision
for douutful debts 5,000
Cash
Bills receivable
1,000
40,000
30,000
45,000
4,000
10,000
TOTAL 1,30,000 TOTAL 1,30,000
They admitted Rajat as a new partner on this date. New profit sharing ratio is agreed as 3:2:3. Rajat
brings in proportionate capital after the following adjustments:
a. Rajat brings Rs. 16,000 as his share of goodwill.
b. Provision for doubtful debts is to be reduced by Rs. 2,000.
c. There is an old type writer valued at Rs. 2,400. It does not appear in the books of the firm, it is
now to be recorded.
d. Patents are valueless.
Prepare necessary accounts and new balance sheet.
47. P and Q are partners in a firm sharing profits in the ratio of 2:1. R isadmitted into the firm with 1/4th
share in profits. He will bring in Rs. 30,000 as capital and capital of other partners are to be adjusted in
the profit sharing ratio. The balance sheet of P and Q as on March 31, 2012 before R’s admission was as
under.
Creditors
Billls payable
General Reserve
Capital Accounts :
P : 50,000
Q : 32,000
8,000
4,000
6,000
82,000
Cash in hand
Cash at bank
Sundry debtors
Stock
Furniture
Machinery
Buildings
2,000
10,000
8,000
10,000
5,000
25,000
40,000
TOTAL 1,00,000 TOTAL 1,00,000
Other terms of agreement are as under:
a. R will bring in Rs. 12,000 as his share of goodwill.
b. Building was valued at Rs. 45,000 and Machinery at Rs. 23,000.
c. A provision for bad debts is to be created at 6 % on debtors.
d. The capital accounts of P and Q are to be adjusted by opening current accounts.
Record necessary journal entries, show necessary accounts and prepare Balance sheet aftr R’s
admission.
48. X and Y wee partners in a firm sharing profits in the ratio of 5:3. They admitted Z as a new partner
for 1/3rd share in the profits. Z was to contribute Rs. 20,000 as his capital. The Balance sheet of X and Y
as on 1.04.2012, the date of Z’s admission, was as under:

Sundry Creditors
General reserves
Capital accounts :
X: 50,000
Y : 35,000
27,000
16,000
85,000
Plant &Machinery
Land and building
Investmetns
Stock
Debtors 20 ,000
Less: Provision : 1,500
Cash
30,000
25,000
20,000
15,000
18,500
19,500
TOTAL 1,28,000 TOTAL 1,28,000
Other terms agreed upon were :
a. Goodwill of the firm was valued at Rs. 12,000.
b. Land and building were to be valued at Rs. 35,000 and Plant and machinery at Rs. 25,000.
c. The provision for doubtful debts was found to be in excess by Rs. 400.
d. A liability for Rs. 1,000 included in sundry creditors was not likely to arise.
e. The capital of the partners to be adjusted on the basis of Z’s contribution of capital in the firm.
f. Excess or shortfall, if any to be transferred to the current accounts.
Prepare Revaluation a/c, Partners’ capital a/cs and the Balance sheet of the new firm. Also pass
necessary Journal entries without naration.
49.X and Y were partners in a firm sharing profits in 3: 2 ratios. Z was admitted as a new partner for
1/4 th share in the profits on 1.4.2005. The Balance Sheet of the firm on 3 1.3.2005 was as follows:
Creditors
General Reserve
X’s Capital
Y’s Capital
10,000
8,000
48,000
34,000
_______
1,00,000
Cash
Debtors
Stock
Furniture
Machinery
Building
10,000
9,000
10,00
6,000
20,200
_45,000
1,00,000
The terms of agreement on Z’s admission were as follows
a. Z will bring Rs. 30,000 for his Capital and Rs. 15,000 for his share of Good will.
b. Building was valued at Rs. 50,000 and Machinery at Rs. 18,000.
c. The capital accounts of X and Y were to be adjusted in the profit-sharing ratio. Necessary cash was
to be brought in or paid off to them as the case may be.
Prepare Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of X, Y and Z.
50.X and Y were partners in a firm sharing profits In the ratio of 3 : 2. On 31.3.2004 their Balance
Sheet was as follows:
Sundry Creditors
Bills Payable
Outstanding Expenses
Capital Accounts:
X 1,80,000
Y 70,000
50,000
20,000
10,000
2,50,000
3,30,000
Land and Building
Machinery
Stock
Debtors
Cash
1,00,000
80,000
1,00,000
40,000
10,000
3,30,000

On the above date Z was admitted as a new partner in the firm for 1/4 share in the profits on the following
terms:
a) Z will bring Rs. 1,20,000 for his capital and Rs. 20,000 for his share as pr-emium for goodwill.
b) Machinery was to be depreciated by 10% and Land and Building was to be appreciated by Rs. 30,000.
c) Stock was overvalued by Rs. 20,000.
d) A provision of 5% was to be created for doubtful debts.
e) Salary outstanding was Rs. 5,000.
Prepare Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of the new firm.
51. Usha and Asha are partners in a firm sharing profits in the ratio of 3 : 2. TheIr Balance Sheet on
31st March, 2003 was as follows:
Liabilities Rs. Assets Rs.
Creditors
Capital Accounts:
A's Capital 30,000
B's Capital 25,000
C's Capital 15,000
27,000
18,000
5,000
40,000
35,000
__________
2,01,000
Cash
Debtors 48,000
Less: Provision 4,800
For bad debts
Stock
Patents
Building
24,000
43,000
30,000
7,400
20,400
_________
1,25,000
Neelam is admitted into the partnership giving her 1/5th share in the profits. Neelam to bring in Rs. 30,000
as her Capital and her share of Goodwill in Cash subject to the following terms:
(a) Goodwill of the firm to be valued at Rs. 50,000.
(b) Stock to be reduced by 10 % and Provision for Bad Debts be reduced by Rs. 2,400.
(c) Patents are valueless.
(d) There was a claim against the firm for damages amounting to Rs. 2,000. The claim has now been
accepted.
Prepare Revaluation Account Partners' Capital Accounts and the Balance Sheet of the new firm.
52.The following is the Balance Sheet as on 31st December, 2002 of A and B, who share profits and
losses in the ratio of 3 : 2 :
Liabilities Rs. Assets Rs.
Capital Accounts:
A :
B :
General Reserve
Workmen's
Compensation Fund
Creditors
10,000
10,000
15,000
5,000
10,000
50,000
Plant & Machinery
Land and Buildings
Debtors 12,000
Less: Provision
For doubtful debts 1,000
Stock
Cash
10,000
8,000
11,000
12,000
9,000
50,000
On 1st January, 2003, they agreed to admit C into partnership on the following terms:
(i) Provision of doubtful debts would be increased by Rs. 2,000.
(ii) The value of Land and building would be increased to Rs. 18,000.
(iii) The value of stock would be increased by Rs. 4,000.
(iv) The liability against Workmen’s Compensation Fund is determined at Rs. 2,000.
(v) C brought in as his share of goodwill Rs. 10,000 in cash.

(vi) C would bring further cash as would make his capital equal to 20% of the total capital of the new firm
after the above revaluation and adjustments are carried out.
Prepare Revaluation A/c, Partner’s Capital A/Cs and Balance Sheet of the firm after C’s admission.
53. Ram, Gurdeep and Fatima are partners dealing in manufacturing of electric power saver machine. They
share profits and losses in the ratio of 5 : 3 : 2. They admitted Mathew for 2/10th share. Fatima is a single
parent of twosmall kids. On the admission of Mathew, Fatima requested to Ram and Gurdeep that she does
not want to changeher profit share and wants to retain her original (old) share.
a. Find out the new profit sharing ratio of Ram, Gurdeep, Fatima and Mathew.
b. What values you can identify in the above problem?
Solution :
Let the total profit of the new firm = 1
Fatima’s share = 2/10, Mathew’s share =2/10,
Remaining profit share of Ram and Gurdeep = 1 –(2/10 + 2/10)= 6/10
Ram’s new share = 30/80
Gurdeep’s share =18/80
Fatima’s new share =16/80
Mathew’s new share =16/80
Thus, new profit sharing ratio= 30 : 18 : 16 : 16
(b) Following values are identified in the above problem :
(i) Conservation of natural resources
(ii) Empowering women entrepreneurship
(iii) Secularism
(iv) Support to the needy person.
54. Deepa and Shweta are friends and after completion of their study they started a business of readymade
Garments by constituting a partnership firm with a profit sharing ratio as 3:2 respectively. Their partnership
firm earns huge profits during few years. They decided to start a scholarship of ` 10,000 p.a. for meritorious
and poor students. On January 1, 2012 they admit Joney, their manager as a new partner with 1/5th share in
future profits. The value of goodwill of the form is 3,50,000 and Joney is not able to bring his share of
goodwill in cash. Joney belongs to a Religious minority community and isexpert in business management.
He contributes ` 50,000 as his capital and old partners want to pass an adjusting entry for the treatment of
goodwill.
Identify the value is involved in this question and pass the journal entries on admission of Joney. Also
calculate the new profit sharing ratio.
Answer: Value involves:
a. Women entrepreneurship
b. Women empowerment
c. Contribution for welfare of poor students
d. Welfare of minorities
e. National integration
55. Amar and Bashir are sharing profits in the ratio of 3:2 respectively. They admit their friend Chandni with
one fourth share in the future profits. Chandni belongs to economic weaker section of the society and not
able to bring her share of goodwill. Goodwill of the firm is valued at ` 20,000. Chandni contributes ` 30,000
as her share of capital.
Identify the value involved in this question. Give Journal entries in the books of the firm to record the above
transactions.
Answers:

Value involved-
(i) Help to economic weaker section of society
(ii) Women empowerment
(iii) National Integration
56. Atal and Madan were partners in a firm sharing profits in the ratio of 5:3. On 31.3.2011, they
admitted Mehta as a new partner for 1/5th share in the profits. The new profit sharing ratio was 5:3:2.
On Mehta’s admission the balance sheet of the firm was as follow:
Capitals:
Atal:
Madan:
Provision for bad debts
Creditors
Workmen compensation
fund
1,50,000
90,000
1,200
20,000
32,000
Land and buildings
Machinery
Patents
Stock
Debtors
Cash
Profit and loss a/c
1,50,000
40,000
5,000
27,000
47,000
4,200
20,000
Total 2,93,200 Total 2,93,200
On Mehta’s admission it was agreed that
a. Mehta will bring Rs. 40,000 as his capital and Rs. 16,000 for his share of goodwill premium, half of
which was withdrawn by old partners.
b. A provision of 2 ½ % for bad and doubtful debts was to be created.
c. Included in the sundry creditors was an item of Rs. 2,500 which was not to be paid.
d. A provision of Rs. 3,000 was to be made for an outstanding bill for electricity.
e. A claim of Rs. 325 for damages against the firm was likely to be admitted. Provision for the same
was to be made.
f. After the above adjustments, the capital of Atal and Madan were to be adjusted on the basis of
Mehta’s capital.
g. Actual cash was to be brought in or to be paid off to Atal and Madan as the case may be.
Prepare necessary accounts and balance sheet of the new firm.
57.A & B are equal partners. On 1st January 2009, they decided to admit C into partnership on the
basis of the following Balance Sheet as on 31-12-2008.
Liabilities Rs Assets Rs
Creditors
Outstanding expenses
Workmen’s compensationfund
Capitals:
A 50,000
B 40,000
Employees Provident Fund
16,000
3,000
5,000
90,000
4,000
Cash at bank
Debtors
Less: Provision for d/d
Stock
Fixed Assets
Profit & Loss A/c
10,800
17,200
32,000
55,000
3,000
1,18,000 1,18,000
The following terms were agreed upon:
a. New profit sharing ratio should be 2:1:1 respectively and C brought Rs 30,000 as capital.
b. Fixed assets is to be appreciated by Rs 10,000.
c. Bad debts amounting to Rs 2,000 to be written off.
d. A provision of 2% was to be made for discount on creditors.
e. Outstanding expenses be brought down to Rs 2,440.

f. The liability on workmen’s compensation fund is determined at Rs 2,000.
g. Employees provident fund be raised by Rs 1,000.
h. C is unable to bring goodwill in cash. Goodwill is valued at Rs 28,000.
Prepare Revaluation Account, Capital Accounts and Balance sheet of new firm.
( R.Profit- Rs 8,680, Capital A/c : A- Rs 54,340, B- Rs 51,340, C-Rs 23,000, B/Sl- Rs 1,53,800.)
ONE MARKS QUESTIONS ANSWERS
Q.l. At the time of change in profit sharing ratio among the existing partners, where will you
record an unrecorded liability?
Ans. Revaluation Account-Debit side
Q.2. Anand, Bhutan and Chadha are partners sharing profits in ratio of 3:2:1. On 1st April 2007,
they decided to share profits equally.Name the partners who is gaining on consequence of
such change.
Ans. Chadha.
Q.3. Give two characteristics of goodwill.
Ans. (i) it is an intangible asset having a definite value.
(ii) It helps in earning more profit.
Q.4. Name any two factors affecting goodwill of a partnership firm.
Ans. (i) Favorable location (ii) Time period
Q.5. In a partnership firm assets are Rs.5, 00,000 and liabilities are Rs. 2, 00,000. The normal
profit rate is 15%. State the amount of normal profits.
Ans. Rs.45,000
Q.6. State the amount of goodwill, if goodwill is to be valued on the basis of 2 years’ purchase of
last year’s profit. Profit of the last year was Rs.20, 000.
Ans. Rs.40,000
Q7. Where will you record ‘increase in machinery’ in case of change in profit sharing ratio
among the existing partners?
Ans. Revaluation Account- Credit Side.
Q8. Name two methods for valuation of goodwill in case of partnership firm.
Ans. (i) Average Profit Method (ii) Super Profit Method
Q.9 Give formula for calculating goodwill under ‘super profit method’.
Ans. Goodwill = Super Profit x Number of Years’ Purchase.
Q.10. Pass the journal entry for increase in the value of assets or decrease in the value of liabilities
in the Revaluation A/c?
Ans Assets A/c Dr. (with the amount of increase)
Liabilities A/c Dr. (with the amount of decrease)
To Revaluation A/c (with the total amount of gain)
(Being revaluation of assets and liabilities)
Q.ll. P,Q and R are partners in a firm sharing profits in the ratio of 2:2:1 on 1.4.2007 the partners
decided to share future profits in the ratio of 3:2:1 on that day balance sheet of the firm
shows General Reserve of Rs 50,000. Pass entry for distribution of reserve.
Ans. General Reserve A/c Dr. 50,000
To P’s Capital A/c 20,000
To Q’s Capital A/c 20000
To R’s Capital A/c 10000
(Being Reserve distributed)
Q.12. “The gaining partner’s should compensate to sacrificing partner’s with the amount of gain.”
Journalise this statement.
Ans. Gaining Partner’s Capital A/c Dr

To Sacrificing Partner’s Capital A/c
(Being compensation given by gaining partner to sacrificing partner)
Q.13. What are the two main rights acquired by the incoming new partner in a partnership firm?
Ans, The two main rights are:
(i) Right to share the assets of the firm.
(ii) Right to share the future profits of the firm.
Q.14. A and B are partners, sharing profits in the ratio of 3:2. C admits for 1/5 share . State the
sacrificing ratio.
Ans. Sacrificing Ratio - 3:2.
Q15. How should the goodwill of the firm be distributed when the sacrificing ratio of any of the
existing partner is negative (i.e. he is gaining)
Ans. In this case the partner with a negative sacrificing ratio, i.e. the gaining partner to the extent of his
gain should compensate to the sacrificing partner to the extent of his gain.
Q.l6. In case of admission of a partner, in which ratio profits or loss on revaluation of assets and
reassessment of liabilities shall be divided?
Ans. Old ratio.
Q.17. Give journal entry for distribution of Accumulated Profits in case of admission of a partner.
Ans. Accumulated Profit A/c Dr.
To Old Partners Capital A/c
(Being distribution of accumulated profits among old partners)
Q.18. At the time of admission of partner where will you record ‘unrecorded investment’?
Ans. Revaluation Account- Credit side.
Q19. The goodwill of a partnership is valued at Rs.20,000. State the amount required by a new
partner, if he is coming for 1/5 share in profits.
Ans. Rs.4,000.
Q.20. What journal entries should be passed when the new partner brings his share of goodwill in kind?
And. (i) Assets A/c Dr -
To Premium for goodwill A/c
(ii) Premium for goodwill A/c Dr -
To Sacrificing Partners’ Capital A/c
Q.21. What journal entries will be passed when the new partner is unable to bring his share of
goodwill in cash?
Ans. New Partner’s Capital A/c Dr. - -
To Sacrificing Partners’ Capital A/c
Q.22. In case of admission of a new partner, goodwill was already appearing in the books of the
firm. Give journal entry for its treatment
Ans Old Partners Capital A/c Dr.
To Goodwill A/c -
(Being old goodwill written off among old partners)
Q.23. At the time of admission of a new partner, workmen’s compensation reserve in appearing in
the Balance sheet as Rs1,000. Give journal entry if workmen’s compensation at the time of
admission is estimated at Rs 1,200.
Ans: Revaluation A/c 200
To Workmen’s Compensation Reserve A/c 200
(Being workmen’s compensation estimated at Rs. 1,200)
Q.24. Give journal entry for recording deceased partner’s share in profit from the closure of last
balance sheet till the date of his death.
Ans. Profit & Loss Suspense Account Dr.
To Deceased Partner’s Capital Account
(Being share of profit to deceased partners)
Q.25. Define gaining ratio.
Ans. Gaining ratio is the ratio in which remaining/continuing partners acquire the share of the outgoing
partner(s).

Q.26. Give two circumstances in which gaining ratio can be applied.
Ans. (i) Retirement of a partner (ii) Death of a partner. .
Q.27. At the time of retirement of a partner give journal entry for writing off the existing goodwill.
Ans. All Partners Capital (including retiring) A/c Dr.
To Goodwill A/c
(Being old goodwill written off among all partners in, old ratio)
Q.28. State the two financial rights acquired by a new Partner?
Ans.New partner is admitted to the partnership if it provided in the partnership deed or all the existing
partners agree to admit the new partner. Section 31 of the Indian Partnership Act 1932 Provides
that a person may be admitted as a new partner into a partnership firm with the consent of all the
Partners.
Q.29. Give the name of the compensation which is paid by a new Partner to sacrificing Partners for
sacrificing their share of profits.
Ans. When a partner joins the firm, he gets the following two rights along with others:
i) Right to share future profit of the firm and
ii) Right to share the assets of the firm.
Q.30. Enumeration the matters that need adjustment at the time of admission of a new Partner.
Ans. The matter that needs adjustment of the time of admission of a new partner is:
i) Adjustment in profit sharing ratio and adjustment of capital
ii) Adjustment for goodwill
iii) Adjustment of Profit / Loss arising from the Revolution of Assets and Reassessment of
Liabilities.
iv) Adjustment of accumulated profits, reserves and losses.
Q.31. Give two circumstances in which sacrificing Ratio may be applied.
Ans. Circumstances in which sacrificing Ratio may be applied are:
i) At the time of admission of a new partner for distributing goodwill brought in by the new
partner.
ii) For adjustment goodwill in case of change in Profit - sharing ratio of existing partners.
Q.32. Why is it necessary to revalue assets and reassess liabilities of a firm in case of admission of a
new partner?
Ans. The assets are revalued and liabilities of a firm are reassess, at the time of admission of a partner
because the new partner should; neither benefit nor suffer because change in the value of assets and
liabilities as on the date of admission.
Q.33. What are the accumulated profit and accumulated losses?
Ans. The profit accumulated over the years and have not been credited to partners’ capital A/c are
known as accumulated Profit or undistributed profit, e.g. the General Reserve, Profit and Loss A/c
(credit balance).
The losses which have not yet been written off to the debit of Partners’ Capital A/c are known as
accumulated Losses, e.g. the Profit and Loss A/c appearing on the assets side of Balance Sheet, etc.
Q.34. Explain the treatment of goodwill in the books of a firm on the admission of a new Partner
when goodwill already appears in the Balance sheet at its full value and the new partner
brings his share of good will in cash.
Ans. By following accounting standard - 10, the existing goodwill (i.e. goodwill appearing in the
Balance Sheet ) is written off to the old partners Capital a/c in their old profit sharing ratio.
Old partners capital A/c Dr. .....
To Goodwill A/c [in old Ratio]
[Being the existing g/w written off in the old ratio.]
Q.35. Under what circumstances the premium for goodwill paid by the incoming Partner will not
recorded in the books of Accounts ?
Ans. When the premium for goodwill is paid by the incoming partner privately, it is not recorded in the
books of A/c as it is as a matter outside the business.
Q.36. A and B share profits and losses in the Ratio of 4:3, they admit C with 3/7th share; which he
gets 2/7th from A and 1/7 from B. What is the new profit sharing ratio?

Ans. A : - = 4/7-2/7 =2/7
B : : = 3/7-1/7=2/7
C : =2/7+1/7=3/7
New Profit sharing Ratio is 2:2:3.
Q.37. The capital of A and B are Rs. 50,000 and Rs. 40,000. To Increase the Capital base of the
firm to Rs. 1, 50,000, they admit C to join the firm; C is required to Pay a sum of Rs. 70,000,
what is the amount of premium of goodwill?
Ans. The total capital of the firm is Rs. 90,000. To increase the capital base to Rs. 1, 50,000, C is to
bring in Rs. 60,000 (Rs. 1, 50,000 - 9, 00, 00) But he bring in Rs. 70,000. Therefore, the excess of
Rs. 10,000 represent premium for goodwill.
Q.38. Distinguish between New Profit - sharing ratio and sacrificing ratio?
Ans. New Profit sharing Ratio Sacrificing Ratio
(1) It is related to all the Partners (1) It is related to old partners only
(Including new)
(2) It is the ratio in which the all (2) It is the ratio in which old partners
Partner (including new) will share have sacrificed their share in favour
Profit in future. Of new Partner or when profit
Sharing Ratio is changed.
(3) New Profit sharing Ratio = (3) Sacrificing Ratio =
Old Ratio - Sacrificing Ratio Old Ratio - New Ratio
Q.39. A & B are partners sharing in the ratio of 3:2. C is admitted. C gets 3/20th from A and 1/20th
from B. calculate new and sacrifice ratio
Ans: 9: 7: 4
Q.40.X & Y are partners share profits in the ratio of 5:3. Z the new partner gets 1/5 of X’s share and
1/3rd of Y’s share. Calculate new ratio.
Ans: 4:2:2
Q.41.P & Q are partners sharing in the ratio of 5:3. They admit R for 1/4th share and agree to
share between them in the ratio of 2:1 in future. Calculate new ratio.
Ans: 2:1:1.
Q.42. On what occasions does the need for valuation of goodwill arise?
Ans.
Q.43.Why is it necessary to revalueassets and reassess liabilities at the time of admission of partner?
Ans.
Q.44. What is meant by sacrificing ratio?
Ans.
Q.45.State two occasions when sacrificing ratio may be applied.
Ans.

Practice of admission of a partner

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