Commerce Fundamental

ADMISSION OF A PARTNER
Class 12 - Accountancy

Section A
1. A and B are partners sharing profits and losses in the ratio of 2:1. C is admitted into the firm for share of [2]
profits. C brings in ₹ 20,000 in respect of his capital. The capitals of old partners A and B, after all, adjustments
relating to goodwill, revaluation of assets and liabilities, etc., are ₹ 45,000 and ₹ 15,000 respectively. It is
agreed that partners’ capitals should be according to the new profit sharing ratio.
Determine the new capitals of A and B and record the necessary journal entries assuming that the partner whose
capital falls short, brings in the amount of deficiency and the partner who has an excess, withdraws the excess
amount.
2. Ahuja and Barua are partners in a firm sharing profits and losses in the ratio of 3 : 2. They decide to admit [2]
Chaudhary into partnership for share of profits, which he acquires equally from Ahuja and Barua. Goodwill is
valued at ₹ 30,000. Chaudhary brings in ₹ 16,000 as his capital but is not in a position to bring any amount for
goodwill. No goodwill account exists in books of the firm. Goodwill account is to be raised at full value. Record
the necessary journal entries.
3. Rajesh and Mukesh are equal partners in a firm. They admit Hari into partnership and the new profit sharing [2]
ratio between Rajesh, Mukesh and Hari is 4 : 3 : 2. On Hari’s admission goodwill of the firm is valued at ₹
36,000. Hari is unable to bring his share of goodwill premium in cash. Rajesh, Mukesh and Hari decided not to
show goodwill in their balance sheet. Record necessary journal entries for the treatment of goodwill on Hari’s
admission.
4. A and B are partners sharing profits and losses in the ratio of 3:1. On Ist Jan. 2017 they admitted C as a new [2]
partner for 1/4 share in the profits of the firm. C brings Rs 20,000 as for his 1/4 share in the profits of the firm.
The capitals of A and B after all adjustments in respect of goodwill, revaluation of assets and liabilities, etc. has
been worked out at Rs 50,000 for A and Rs 12,000 for B. It is agreed that partner’s capitals will be according to
new profit sharing ratio. Calculate the new capitals of A and B and pass the necessary journal entries assuming
that A and B brought in or withdrew the necessary cash as the case may be for making their capitals in
proportion to their profit sharing ratio?
5. Ram and Rahim are partners in firm sharing profits and losses in the ratio of 3 : 2. Rahul is admitted into a [2]
partnership for share in profits. He brings in ₹ 10,000 as capital, but is not in a position to bring any amount
for his share of goodwill which has been valued at ₹ 30,000. Give necessary journal entries under each of the
following situations:
a. When there is no goodwill appearing in the books of the firm; and
b. When the goodwill appears at ₹ 15,000 in the books of the firm.
6. Arihant and Dev are partners in firm sharing profits and losses in the ratio of 3 : 2. They admit Som into [2]
partnership with share in the profits. Som brings in ₹ 30,000 as his capital. He also brings in the necessary

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 amount for his share of goodwill in cash. On the date of admission, the goodwill is valued at ₹ 24,000 and the
goodwill account appears in the books at ₹ 12,000. Som brings in the necessary amount for his share of
goodwill and agrees that the existing goodwill account is to be written off. Record the necessary journal entries
in the books of the firm.
7. X and Y are partners in a firm sharing profits and losses in 4:3 ratio. They admitted Z for 1/8 share. Z brought ₹ [2]
20,000 for his capital and ₹ 7,000 for his 1/8 share of goodwill. Goodwill already appears in the books at ₹
40,000. Show necessary journal entries in the books of X, Y and Z?
8. A and B are partners in a firm sharing profits and losses in the ratio of 3 : 2. They decide to admit C into [2]
partnership with share in profits. C will bring in ₹ 30,000 for capital and the requisite amount of goodwill in
cash. The goodwill of the firm is valued at ₹ 20,000. The new profit sharing ratio is 2 : 1 : 1. A and B withdraw
their share of goodwill. Pass necessary journal entries?
9. Hem and Nem are partners in a firm sharing profits and losses in the ratio of 3 : 2. Their capitals were ₹ 80,000 [2]
and ₹ 50,000 respectively. They admitted Sam as a new partner for share in the future profits. S brought ₹
60,000 as his capital. Calculate the value of goodwill of the firm and record necessary journal entries on Sam’s
admission, if:
a. Sam brings his share of goodwill
b. Sam does not bring his share of goodwill
10. Amar and Akbar are equal partners in a firm. They admitted Anthony as a new partner and the new profit [2]
sharing ratio is 4 : 3 : 2. Anthony could not bring this share of goodwill ₹ 45,000 in cash. It is decided to do
adjustments for goodwill without opening a goodwill account. Pass the necessary journal entry for the treatment
of goodwill?
11. A, B and C are partners sharing profits in 2 : 2 : 1 ratio admitted D for 1/8 share which he acquired entirely from [2]
A. Calculate new profit sharing ratio?
12. Rim, Sim and Tim are partners sharing profits and losses in 3:2:2 ratio. They admitted Dim as a new partner for [2]
share which he acquired from Rim, Sim and Tim in 2:2:1 ratio respectively. Calculate the new profit sharing
ratio?
13. Ram and Shyam are partners in firm sharing profits and losses in the ratio of 3 : 2. They admitted Amit into [2]
partnership with share in profits. Amit brings in ₹ 30,000 as his share of capital and the requisite amount of
premium in cash. The goodwill of the firm is valued at ₹ 20,000. The new profit sharing ratio is 2 : 1 : 1. Ram
and Shyam withdraw their share of goodwill. Give necessary journal entries.
14. Rajinder and Surinder are partners in a firm sharing profits and losses in the ratio of 4:1. On 30 April 2018, they [2]
admit Narender as a new partner. On that date, there was a balance of ₹ 20,000 in general reserve and a debit
balance of ₹ 10,000 in the profit and loss account of the firm. Pass necessary journal entries regarding the
adjustment of an accumulate profit or loss.
15. Explain how will you deal with goodwill when new partner is not in a position to bring his share of goodwill in [2]
cash?
Section B
16. Sunil and Dilip are partners in a firm sharing profits and losses in the ratio 5 : 3. Sachin is admitted in the firm [3]
for th share of profits. He brings in ₹ 20,000 as capital and ₹ 4,000 as his share of goodwill by cheque. Give
the necessary journal entries,
a. When partners decided to retain goodwill in business.
b. When the amount of goodwill is fully withdrawn.

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 c. When 50% of the amount of goodwill is withdrawn.
17. Verma and Sharma are partners in a firm sharing profits and losses in the ratio of 5:3. They admitted Ghosh as a [3]
new partner for 1/5 share of profits. Ghosh is to bring in ₹ 20,000 as capital and ₹ 4,000 as his share of goodwill
premium. Give the necessary journal entries:
a. When the amount of goodwill is retained in the business.
b. When the amount of goodwill is fully withdrawn.
c. When 50% of the amount of goodwill is withdrawn.
d. When goodwill is paid privately.
18. Explain in detail the treatment of accumulated profits and losses and reserves on the admission of a new partner [3]
in a partnership firm?
19. According to you is it compulsory to revalue assets and liabilities at the time of admission of a partner? If yes, [3]
why? Also explain how is this treated in the book of account?
20. Following in Balance Sheet of A and B who share profits in the ratio of 3:2. [3]
Balance Sheet of A and B as on April 1, 2015

Liabilities Amount (₹) Assets Amount (₹)

Sundry creditors 20,000 Cash in hands 3,000

Capitals Debtors 12,000

D 30,000 Stock 15,000

E 20,000 50,000 Furniture 10,000

Plant and Machinery 30,000

70,000 70,000

On that date C is admitted into the partnership on the following terms:

i. C is to bring in ₹ 15,000 as capital and ₹ 5,000 as premium for goodwill for share.
ii. The value of a stock is reduced by 10% while plant and machinery is appreciated by 10%.
iii. Furniture is revalued at ₹ 9,000.
iv. A provision for doubtful debts is to be created on sundry debtors at 5% and ₹ 200 is to be provided for an
electricity bill.
v. Investment worth ₹ 1,000 (not mentioned in the balance sheet) is to be taken into account.
vi. A creditor of ₹ 100 is not likely to claim his money and is to be written off.
Record necessary journal entries and prepare revaluation account and capital account of partners.
21. A, B and C are partners in a firm sharing profits the ratio of 3 : 2 : 1. D is admitted into the firm for share in [3]
profits, which he gets as from A and from B both. The total capital of the firm is agreed upon as ₹ 1,20,000
and D are to bring in cash equivalent to of this amount as his capital. The capitals of other partners are also to
be adjusted in the ratio of their respective shares in profits. The capitals of A, B, and C after all adjustments are
₹ 40,000, ₹ 35,000 and ₹ 30,000 respectively. Calculate the new capitals of A, B, and C, and record the
necessary journal entries.
22. Explain various methods for the treatment of goodwill on the admission of a new partner? [3]
23. A and B were partners in a firm sharing profits and losses in the ratio of 3 : 2. They admit C into the partnership [3]
with share in the profits. Calculate the new profit sharing ratio?
24. P and Q are partners sharing profits in 2 : 1 ratio. They admitted R into partnership giving him share which he [3]

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 acquired from P and Q in 1 : 2 ratio. Calculate new profit sharing ratio?
25. Aditya and Balan are partners sharing profits and losses in 3:2 ratio. They admitted Christopher for 1/4 share in [3]
the profits. The new profit sharing ratio agreed was 2:1:1. Christopher brought ₹ 50,000 for his capital. His
share of goodwill was agreed to at ₹ 15,000. Christopher could bring only ₹ 10,000 out of his share of goodwill.
Record necessary journal entries in the books of the firm?
Section C
26. Ashish and Dutta were partners in a firm sharing profits in 3:2 ratio. On Jan. 01, 2015 they admitted Vimal for [5]
1/5 share in the profits. The Balance Sheet of Ashish and Dutta as on Jan. 01, 2016 was as follows:

Balance Sheet of A and B

as on 1.1.2016

Liabilities Amount Rs Assets Amount Rs

Creditors 15,000 Land & Building 35,000

Bills Payable 10,000 Plant 45,000

Ashish Capital 80,000 Debtors 22,000

Dutta’s Capital 35,000 Less: Provision 2,000 20,000

Stock 35,000

Cash 5,000

1,40,000 1,40,000

It was agreed that:

1. The value of Land and Building be increased by Rs 15,000.
2. The value of plant be increased by 10,000.
3. Goodwill of the firm be valued at Rs 20,000.
4. Vimal to bring in capital to the extent of 1/5th of the total capital of the new firm.
Record the necessary journal entries and prepare the Balance Sheet of the firm after Vimal’s admission.
27. A and B are partners sharing profits and losses as 2 : 1. On 1st April, 2016 they admit C as a partner for 1/4th [5]
share who pays ₹4,50,000 as goodwill privately. On 1st April, 2017, they take D as a partner for 3/5th share who
brings ₹4,00,000 as goodwill, out of which half is withdrawn by the existing partners. On 1st April, 2018, E is
admitted as a partner for 1/6th share who brings ₹5,00,000 as goodwill which is retained in the business.
Journalise the above transactions in the books of the firm.
28. Following is the Balance Sheet of Shashi and Ashu sharing profits as 3 : 2. [5]

Liabilities ₹ Assets ₹

Creditors 1,80,000 Debtors 2,20,000

General Reserve 2,50,000 Less: Provision for Doubtful Debts 10,000 2,10,000

Workmen’s Compensation Reserve 1,50,000 Land & Building 1,80,000

Capital: Shashi 1,50,000 Plants & Machinery 1,20,000

Ashu 1,00,000 Stock 1,10,000

Bank 2,10,000

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 8,30,000 8,30,000

On admission of Tanya for 1/6th share in the profits it was decided that:
i. Provision for doubtful debts to be increased by ₹15,000.
ii. Value of land and building to be increased to ₹2,10,000.
iii. Value of stock to be increased by ₹25,000.
iv. The liability of workmen’s compensation claim was determined to be ₹1,20,000.
v. Tanya brought in as her share of goodwill ₹1,00,000 in cash
vi. Tanya was to bring further cash of ₹1,50,000 for her capital.
Prepare Revaluation A/c, Capital A/cs and Balance Sheet of the new firm.
29. A and B are partners sharing profits in the ratio of 5 : 3. C was admitted for th share in profits. C acquires this [5]
share as from A and th of his share from B. C brings in ₹1,00,000 as his capital.
At the time of C’s admission:
i. The firm’s goodwill was valued at ₹2,40,000.
ii. General Reserve was ₹40,000.
iii. Profit on revaluation of assets and liabilities was ₹24,000.
Before any adjustments were made, the Capitals of A and B were ₹1,20,000 and ₹70,000 respectively.
It is decided that after C’s admission, the Capitals of A and B be adjusted on the basis of C’s Capital, any excess
or shortfall to be adjusted by withdrawing or bringing in Cash by the old partners. You are required to pass
necessary journal entries on C’s admission.
Hint. Sacrificing Ratio 3:1; New Ratio 7 : 5 : 4.
30. George and Henry are partners sharing profits in the ratio of 3 : 2. They decided to admit David as a new partner [5]
and to share future profits and losses equally.
David brings in ₹50,000 as his capital. Goodwill of the firm is valued at ₹60,000. Record the necessary journal
entries:
a. When no goodwill appears in the books
b. When goodwill appears at ₹50,000, and
c. When goodwill appears at ₹1,00,000.
31. A and B sharing profits and losses in the ratio of 3 : 2 decide to admit C for rd share. On this date, their [5]
Balance Sheet disclosed the following items:

Investments Fluctuation Reserve 40,000

Investments (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
32. A, B and C sharing profits and losses in the ratio of 3 : 2 : 1 decide to admit D for 1/5th share with effect from [5]
1st April, 2017. An extract of their Balance Sheet as at 31st March, 2017 is :

Liabilities ₹ Assets ₹

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 Investments Fluctuation Reserve 30,000 Investments (At cost) 5,00,000

Show the accounting treatment under the following alternative cases :

Case 1. If there is no other information.
Case 2. If the market value of investments is ₹5,00,000.
Case 3. If the market value of investments is ₹4,82,000.
Case 4. If the market value of investments is ₹4,55,000.
Case 5. If the market value of investments is ₹5,24,000.
33. A and B are partners sharing profits in the ratio of 3 : 1. They admitted C as a partner by giving him 1/4th share [5]
of profits which he acquired from A and B in the ratio of 2 : 1. C brings in ₹1,00,000 as Capital and ₹36,000 as
goodwill in cash. At the time of admission of C, general reserve appeared in their balance sheet at ₹50,000.
Following revaluations are also made:
I. Value of Plant is to be reduced by ₹10,000.
II. Bad Debts Provision is to be reduced from ₹4,000 to ₹3,000.
III. ₹2,000 Out of total Creditors of ₹20,000 are not to be paid.
IV. There is an outstanding bill for repairs for ₹1,200.
Pass necessary journal entries and prepare a Revaluation Account. Also, calculate the new profit sharing ratios.
34. A and B are partners sharing profits in the ratio of 3 : 1. On 1st April 2017, they admit C into partnership for th [5]
share who pays ₹50,000 as premium privately. On 1st April 2018, they admit D into partnership for th share
who brings ₹40,000 as premium 75% of which is withdrawn by the existing partners. On 1st April 2019, E is
admitted as a partner for th share who brings ₹60,000 as premium which is retained in the business.
Pass journal entries for the above.
35. Charu and Deepika were partners sharing profits in the ratio of 3 : 2. They admitted Esha, as a new partner and [5]
the new ratio is agreed at 4 : 3 : 2. On the date of Esha’s admission, the Balance Sheet of Charu and Deepika
disclosed General Reserve ₹1,20,000; Dr. balance in Profit & Loss Account ₹40,000; Investments ₹2,00,000
and Investment Fluctuation Reserve ₹60,000.
The following was agreed upon Eshas’ admission:
i. Esha will bring ₹3,00,000 as her Capital and her share of goodwill premium in cash.
ii. Goodwill of the firm be valued ₹1,80,000.
iii. The market value of investments was ₹2,30,000.
Pass the necessary journal entries.
Section D
36. A and B are partners sharing profits and losses in the ratio of 3 : 2. On 31st March, 2019, their Balance Sheet [8]
was as follows:

Liabilities ₹ Assets ₹

Creditors 2,50,000 Cash in Hand 25,000

Bills Payable 1,00,000 Cash at Bank 5,75,000

General Reserve 1,50,000 Debtors 50,000

Capital A/cs: Stock 3,00,000

A 8,00,000 Building 5,00,000

B 4,00,000 12,00,000 Machinery 2,00,000

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 Goodwill 50,000

17,00,000 17,00,000

They admit C as a partner with effect from 1st April, 2019 for rd share on the following terms:
i. C will bring in ₹5,00,000 as capital and ₹2,00,000 as his share of goodwill but he actually contributed only
₹1,20,000 towards goodwill.
ii. Building and Machinery to be depreciated by 5%.
iii. Stock to be revalued at ₹4,00,000.
iv. There is an unrecorded asset worth ₹1,20,000.
v. One month salary of ₹30,000 is outstanding.
Prepare Revaluation Account, Bank Account, Capital Accounts of Partners and the Balance Sheet after the
admission of C.
37. Following is the Balance Sheet of A and B, who had been sharing profits in the proportion of 3/4th and 1/4th as [8]
at 31st March, 2019:

Liabilities ₹ Assets ₹

Creditors 37,500 Cash at Bank 22,500

General Reserve 6,000 Bills Receivable 3,000

Capital A/cs: Debtors 16,000

A 28,500 Stock 20,000

B 15,500 44,000 Furniture 1,000

Land and Building 25,000

87,500 87,500

They admit C into partnership on 1st April, 2019 on the following terms:
A. C pays ₹14,000 as his capital for l/5th share in the future profits.
B. Goodwill is valued at ₹20,000. C is unable to bring cash for his share of goodwill.
C. Stock and Furniture be reduced by 10% and 5% Provision for Doubtful Debts be created on Debtors.
D. Land and Building be appreciated by 20%.
E. Capital Accounts of the partners be readjusted on the basis of their profit-sharing arrangement and any
excess or deficiency is to be transferred to their Current Accounts.
Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet of the new firm.
38. A and B are partners sharing profits in equal proportion. Following is the Balance Sheet as at 31st March, 2021 [8]
Balance Sheet

Liabilities Rs. Assets Rs.

Creditors 40,000 Cash 2,000

B/P 14,000 Bank 10,000

Capitals: Debtors 42,000

A 50,000 Less: Provision 4,000 38,000

B 45,000 95,000 B/R 17,000

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 Stock 20,000

Investments 20,000

Furniture 5,000

Building 37,000

1,49,000 1,49,000

C admitted as a partner and contribute 30,000 as capital. It was decided that the provision raised to Rs. 6,500.
Building and furniture be valued at Rs. 45,000 and Rs. 4,500 respectively. Personal investments of A Rs. 4,300
be treated as firm's investments. A claim of Rs. 1,200 by an employee has been admitted.
Prepare Revaluation Account, Capital Account and Balance Sheet after admission.
39. A and B share profits in the ratio of 2 : 1. Their balance sheet as at 31st March, 2018 was as follows: [8]

Liabilities ₹ Asset ₹

Provision for Doubtful Debts 800 Cash at Bank 6,000

Bank Overdraft 24,000 Sundry Debtors 20,000

Sundry Creditors 25,200 Stock 40,000

Capitals: Building 66,000

A 60,000 P & L Account 18,000

B 40,000 1,00,000

1,50,000 1,50,000

C is admitted into partnership on 1st April, 2018 on the following terms :

i. New profit sharing ratio will be 4 : 3 : 2 and C will pay ₹40,000 as his capital.
ii. Goodwill of the firm is valued at ₹45,000 but C is unable to bring any amount for goodwill.
iii. The provision for doubtful debts is to be raised to ₹2,000.
iv. Stock be depreciated by ₹5,000.
v. Provision be made for outstanding expenses amounting to ₹2,800.
vi. Capitals of A and B be adjusted on the basis of new partner’s capital and the actual cash to be paid off or
brought in, as the case may be.
Prepare Journal entries, capital accounts, and the opening Balance Sheet of the new firm.
40. The following is the balance sheet of A, B and C sharing profits and losses in proportion of 6 : 5 : 3 [8]
respectively:-

Liabilities ₹ Assets ₹

Creditors 18,900 Cash 1,890

Bills Payable 6,300 Debtors 26,460

General Reserve Stock 29,400

Capitals:- Furniture 7,350

A 35,400 Land & Building 45,150

B 29,850 Goodwill 5,250

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C 14,550 79,800

1,15,500 1,15,500

They agreed to take D into partnership and give him l/8th share on the following terms:-
1. That Furniture be depreciated by ₹2,920.
2. An Old Customer, whose account was written off as bad, has promised to pay ₹2,000 in full settlement of his
full debt.
3. That a provision of ₹1,320 be made for outstanding repair bills.
4. That the value of land and building having appreciated be brought upto ₹56,910.
5. That D should bring in ₹14,700 as his capital.
6. That D should bring in ₹14,070 as his share of goodwill.
7. That after making the above adjustments, the capital accounts of old partners be adjusted on the basis of the
proportion of D’s Capital to his share in business, i.e., actual cash to be paid off or brought in by the old
partners, as the case may be.
Pass the necessary journal entries and prepare the balance sheet of the new firm.

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