(Q61-70) Admission of a Partner Ts Grewal Solutions 2025-26

In this article, I have provided Admission of a Partner TS Grewal Solutions 2025-26. You can find the solutions of specifically Q61 to Q70 here. If you have any doubts regarding any of these questions, you can ask in the comments. I will try to resolve your doubts as soon as possible.

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Question 61: (Madhu and Vidhi)

The Balance Sheet of Madhu and Vidhi who are sharing profits in the ratio of 2 : 3 as at 31st March, 2016 is given below:

Balance Sheet
Liabilities	Rs.	Asset		Rs.
Madhu’s Capital	5,20,000	Land and Building		3,00,000
Vidhi’s Capital	3,00,000	Machinery		2,80,000
General Reserve	30,000	Stock		80,000
Bills Payable	1,50,000	Debtors	3,00,000
		Less: Provision	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, 2016 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, Partners’ Capital Accounts and the Balance Sheet of the reconstituted firm.

Answer:

Revaluation Account
Dr.						Cr.
Particulars			Rs.	Particulars	Rs.
Provision for Doubtful Debts			5,000	Land &Building	26,000
Claim against Workmen Compensation			6,000
Revaluation Profit
	Madhu’s Capital	6,000
	Vidhi’s Capital	9,000	15,000
			26,000		26,000

Partners’ Capital Account
Dr.								Cr.
Particulars	Madhu	Vidhi	Gayatri	Particulars	Madhu	Vidhi	Gayatri
Balance c/d	5,98,000	4,17,000	4,00,000	Balance b/d	5,20,000	3,00,000
				Bank			4,00,000
				General Reserve	12,000	18,000
				Premium for Goodwill	60,000	90,000
				Revaluation	6,000	9,000

	5,98,000	4,17,000	4,00,000		5,98,000	4,17,000	4,00,000

Balance Sheet as on March 31, 2016
Liabilities		Rs.	Assets		Rs.
Bills Payable		1,50,000	Bank (50,000 + 4,00,000 + 1,50,000)		6,00,000
Claim for Workmen Compensation		6,000	Sundry Debtors	3,00,000
Capital:			Less: Provision for Doubtful Debt	15,000	2,85,000
Madhu	5,98,000		Stock		80,000
Vidhi	4,17,000		Machinery		2,80,000
Gayatri	4,00,000	14,15,000	Land &Building		3,26,000
		15,71,000			15,71,000

Working Notes:

WN1: Calculation of Gayatri’s Share of Goodwill

Gayatri’s share=3,00,000×5/10=1,50,000 to be shared in 2:3

WN2: Calculation of Sacrificing Ratio

Sacrificing Ratio = Old Ratio – New Ratio
Madhu=2/5−2/10=2/10
Vidhi=3/5−3/10=−3/10

Question 62: (X and Y)

X and Y share profits in the ratio of 5 : 3. Their Balance Sheet as at 31st March, 2024 was:

Liabilities		Rs.	Assets		Rs.
Creditors		15,000	Cash at Bank		5,000
Employees’ Provident Fund		10,000	Sundry Debtors	20,000
Workmen Compensation Reserve		5,800	Less: Provision for Doubtful Debts	600	19,400
Capital A/cs:			Stock		25,000
X	70,000		Fixed Assets		80,000
Y	31,000	1,01,000	Profit and Loss A/c		2,400
		1,31,800			1,31,800

They admit Z into partnership with 1/8th share in profits on 1st April, 2024. Z brings 20,000 as his capital and 12,000 for goodwill in cash. Z acquires his share from X. Following revaluations 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.
(d) Creditors are to be paid 1,000 more.
(e) Fixed Assets are to be revalued at 70,000.
Prepare Journal entries, necessary accounts and new Balance Sheet. Also, calculate new profit-sharing ratio.

Answer:

Revaluation Account
Dr.			Cr.
Particulars	Rs.	Particulars	Rs.
Stock	3,000	Provision for D. Debts	600
Creditors	1,000
Fixed Assets	10,000	Loss transferred to
Provident Fund	5,000	X Capital	11,500
		Y Capital	6,900
	19,000		19,000

Partners’ Capital Accounts
Dr.							Cr.
Particulars	X	Y	Z	Particulars	X	Y	Z
Revaluation (Loss)	11,500	6,900		Balance b/d	70,000	31,000
Profit and Loss	1,500	900		Workmen’s Comp. Fund	3,625	2,175
Balance c/d	72,625	25,375	20,000	Cash			20,000
				Premium for Goodwill	12,000
	85,625	33,175	20,000		85,625	33,175	20,000

Balance Sheet as on March 31, 2024 after Z’s admission
Particulars		Rs.	Assets	Rs.
Creditors (15,000 + 1,000)		16,000	Land and Building	5,000
Provident Fund (10,000 + 5,000)		15,000	Sundry Debtors	20,000
Capital A/cs:			Stock (25,000 – 3,000)	22,000
X	72,625		Fixed Assets (80,000 – 10,000)	70,000
Y	25,375		Cash	32,000
Z	20,000	1,18,000
		1,49,000		1,49,000

Working Notes

WN1: Distribution of Revaluation Loss

X’s capital will be debited =18,400×5/8=11,500

Y’s capital will be debited =18,400×3/8=6,900

WN2: Distribution Accumulated Loss

X’s capital will be debited =2,400×5/8=1,500

Y’s capital will be Credited =2,400×3/8=900

WN3: Distribution of Workmen’s Compensation Fund

X’s capital will be credited =5,800×5/8=3,625

Y’s capital will be Credited =5,800×3/8=2,175

WN4: Z’s premium for goodwill will be transferred to X’s Capital Account because Z receives his entire share from X.

WN5: Calculation of New Profit Sharing Ratio

Z acquired 1/8^th share from X

New share of X=5/8-1/8=4/8

New share of Y=3/8

New share of Z=1/8

New profit sharing ratio= 4;3:1

Question 63: (Rajesh and Ravi)

Rajesh and Ravi are partners sharing profits in the ratio of 3 : 2. Their Balance Sheet at 31st March, 2024 stood as:

BALANCE SHEET as at 31st March, 2024
Liabilities		Rs.	Assets		Rs.
Creditors		38,500	Cash		2,000
Outstanding Rent		4,000	Stock		15,000
Capital A/cs:			Prepaid Insurance		1,500
Rajesh	29,000		Debtors	9,400
Ravi	15,000		Less : Provision for Doubtful Debts	400	9,000
			Machinery		19,000
			Building		35,000
			Furniture		5,000
		86,500			86,500

Raman is admitted as a new partner introducing a capital of 16,000. The new profit-sharing ratio is decided as 5:3:2. Raman is unable to bring in any cash for goodwill. So, it is decided to value the goodwill on the basis of Raman’s share in the profits and the capital contributed by him. Following revaluations are made:
(a) Stock to decrease by 5%;
(b) Provision for Doubtful Debts is to be 500;
(c) Furniture to decrease by 10%;
(d) Building is valued at 40,000.
Show necessary Ledger Accounts and Balance Sheet of new firm.

Answer:

Revaluation Account
Dr.				Cr.
Particulars		Rs.	Particulars	Rs.
Stock		750	Building	5,000
Provision for D. Debts	500
Less: Old Provision	400	100
Furniture		500

Profit on Revaluation transferred to
Rajesh Capital		2,190
Ravi Capital		1,460
		5,000		5,000

Partners’ Capital Accounts
Dr.							Cr.
Particulars	Rajesh	Ravi	Raman	Particulars	Rajesh	Ravi	Raman
				Balance b/d	29,000	15,000
				Revaluation	2,190	1,460
Balance c/d	31,190	16,460	16,000	Cash			16,000
(before and just went of
Goodwill)
	31,190	16,460	16,000		31,190	16,460	16,000
Rajesh’s Capital			1,635	Balance c/d	31,190	16,460	16,000
Raman’s Capital			1,635	Raman’s Capital	1,635	1,635
Balance c/d	32,825	18,095	12,730
	32,825	18,095	16,000		32,825	18,095	16,000

Balance Sheet as on March 31, 2024 after Raman’s admission
Liabilities		Rs.	Assets		Rs.
Creditors		38,500	Cash (2,000 + 16,000)		18,000
Outstanding Rent		4,000	Stock (15,000 – 750)		14,250
Capital A/cs:			Prepaid Insurance		1,500
Rajesh	32,825		Debtors	9,400
Ravi	18,095		Less: Provision for D. Debts	500	8,900
Raman	12,730	63,730	Machinery		19,000
			Building (35,000 + 5,000)		40,000
			Furniture (5,000 – 500)		4,500
		1,06,150			1,06,150

Working Notes:

WN1 Calculation of Sacrificing Ratio:

	Rajesh	Ravi	Raman
OLD RATIO	3 :	2
NEW RATIO	5 :	3 :	2

Sacrificing Ratio = Old Ratio − New Ratio

	Rajesh’s	=3/5-5/10
		=1/10
	Ravi’s	=2/5-3/10
		=1/10
			Rajesh		Ravi
Sacrificing ratio=			1/10	:	1/10
=			1	:	1

WN2 Calculation of Goodwill

Actual Capital of all Partners before adjustment of goodwill = Rajesh’s Capital + Ravi’s Capital + Raman’s Capital
= 31,190 + 16,460 + 16,000
= 63,650

Capitalised value on the basis of Raman’s share =16,000×10/2= 80,000
Goodwill of the firm = Capitalised value of the firm-Actual capital of the firm (before adjustment of the goodwill)

= 80,000-63,650

= 16,350
Raman’s share of Goodwill =16,350×2/10 = 3,270

WN3 Adjustment of Raman’s share of goodwill
Rajesh and Ravi each Capital Accounts will be credited by =3,270×1/2=1,635

Journal
Particulars		L.F.	Debit	Credit
Raman’s Capital A/c	Dr.		3,270
To Rajesh’s Capital A/c				1,635
To Ravi’s Capital A/c				1,635
(Raman’s share of goodwill adjusted)

WN4 Distribution of Profit on Revaluation (in old ratio)
Rajesh will get =3,650×3/5=2190

Ravi will get =3,650×2/5=1460

Question 64: (The balance sheet of A and B)

On 31st March, 2019, the Balance Sheet of A and B, who were sharing profits in the ratio of 3 : 2 was as follows:

Liabilities		Rs.	Assets		Rs.
Creditors Investment Fluctuation Fund General Reserve Capitals A/cs:		30,000 12,000 25,000	Cash at Bank		20,000
			Debtors Less: Provision for Bad Debts	85,000 (5,000)	80,000
			Stock Investments Furniture		1,30,000 60,000 77,000
A B	1,60,000 1,40,000	3,00,000
		3,67,000			3,67,000

On 1st April, 2019, they decided to admit C as a new partner for 1/5th share in the profits on the following terms:

(i) C brought 1,00,000 as his capital and 50,000 as his share of premium for goodwill.

(ii) Outstanding salaries of 2,000 to be provided for.

(iii) The market value of investments was 50,000.

(iv) A debtor whose dues of 18,000 were written off as bad debts paid 12,000 in full settlement.

Prepare Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of the new firm. (CBSE 2020)

Answer:

Revaluation A/c
Particulars		Rs.	Particulars	Rs.
To Outstanding salary To Gain transferred to: (WN1)		2,000 10,000	By Bad debts Recovered A/c	12,000
A’s Capital A/cB’s Capital A/c	6,000 4,000
		12,000		12,000

Capital A/c
Particulars	A	B	C	Particulars	A	B	C
To Balance c/d	2,12,200	1,74,800	1,00,000	By Balance b/d By revaluation A/c By Investment Fluctuation Fund (WN2) By General Reserve A/c(WN3)By Bank A/c By Premium A/c (WN4)	1,60,000 6,000 1,200 15,000 30,000	140,000 4,000 800 10,000 20,000	1,00,000
	2,12,200	1,74,800	1,00,000		2,12,200	1,74,800	1,00,000

Balance Sheet
Particulars		Rs.	Particulars		Rs.
CreditorsO/s Salary Capitals A/cs:		30,000 2,000 4,87,000	Cash (WN5)		1,82,000
			DebtorsLess: Pro. D. D.	85,000 -5,000	80,000
			Stock Investment Furniture		1,30,000 50,000 77,000
ABC	2,12,200 1,74,800 1,00,000

		5,19,000			5,19,000

Working Notes;

WN1 Distribution of Revaluation Gain in 3:2

A=10,000×3/5=6,000

B=10,000×2/5=4,000

WN2 Investment fluctuation Reserve in 3:2

A = 2,000×3/5 = 1,200

B = 2,000×2/5 = 800

WN3 General Reserve in 3:2

A = 25,000×3/5 = 15,000

B = 25,000×2/5 = 10,000

WN4 Distribution of Premium in Sacrificing Ratio 3:2

A = 50,000×3/5 = 30,000

B = 50,000×2/5 = 20,000

WN5 Cash balance

Cash Balance = 20,000+1,00,000+50,000+12,000

Cash Balance = 1,82,000

Question 65: (Divya, Yasmin, and Fatima)

Divya, Yasmin, and Fatima are partners in a firm, sharing profits and losses in 11 : 7 : 2 respectively. The Balance Sheet of the firm on 31st March, 2018 was as follows:

BALANCE SHEET as at 31st March, 2018
Liabilities		Rs.	Assets		Rs.
Sundry Creditors		70,000	Factory Building		7,35,000
Public Deposits		1,19,000	Plant and Machinery		1,80,000
Reserve Fund		90,000	Furniture		2,60,000
Outstanding Expenses		10,000	Stock		1,45,000
Capital A/cs:			Debtors	1,50,000
Divya	5,10,000		Less: Provision	(30,000)	1,20,000
Yasmin	3,00,000		Cash at Bank		1,59,000
Fatima	5,00,000	13,10,000
		15,99,000			15,99,000

On 1st April, 2018, Aditya is admitted as a partner for one-fifth share in the profits with a capital of 4,50,000 and necessary amount for his share of goodwill on the following terms:
(a) Furniture of 2,40,000 were to be taken over Divya, Yasmin, and Fatima equally.
(b) A creditor of 7,000 not recorded in books to be taken into account.
(c) Goodwill of the firm is to be valued at 2.5 years’ purchase of average profits of last two years. The profit of the last three years were:
2015-16 − 6,00,000; 2016-17 − 2,00,000; 2017-18 − 6,00,000.
(d) At time of Aditya’s admission. Yasmin also brought in 50,000 as fresh capital.
(e) Plant and Machinery is re-valued to 2,00,000 and expenses outstanding were brought down to 9,000.
Prepare Revaluation Account, Partners’ Capital Account, and the Balance Sheet of the reconstituted firm.

Answer:

In the books of Divya, Yasmin, Fatima, and Aditya
Dr.	Revaluation A/c					Cr.
Particulars			Rs.	Particulars	Rs.
To Sundry Creditors A/c			7,000	By Plant and Machinery A/c	20,000
To Profit Transferred to:				By Outstanding Expenses A/c	1,000
Divya’s Capital A/c		7,700
Yasmin’s Capital A/c		4,900
Fatima’s Capital A/c		1,400	14,000

			21,000		21,000

Dr.	Partner’s Capital A/c									Cr.
Particulars		Divya	Yasmin	Fatima	Aditya	Particulars	Divya	Yasmin	Fatima		Aditya
To Furniture A/c		80,000	80,000	80,000		By balance b/d	5,10,000	3,00,000	5,00,000
						By Bank A/c		50,000			4,50,000
To balance c/d		5,97,200	3,76,400	4,50,400	4,50,000	By Premium	1,10,000	70,000	20,000
						for Goodwill A/c
						By Reserve Fund A/c	49,500	31,500	9,000
						By Revaluation A/c	7,700	4,900	1,400

		6,77,200	4,56,400	5,30,400	4,50,000		6,77,200	4,56,400	5,30,400		4,50,000

Working Notes:

Calculation of Goodwill brought in by Aditya

Average Profits	=	(Normal profits from 31^st March, 2017 to 31^st March, 2018)/2
	=	(2,00,000 + 6,00,000)/2= 4,00,000
Goodwill	=	Average Profits × No. of years of Purchase
	=	(4,00,000 × 2.5) = 10,00,000
Goodwill brought in by Aditya	=	(10,00,000 × 1/5) = 2,00,000

Balance Sheet
as at 31^st March, 2018
Liabilities		Rs.	Assets		Rs.
Capitals:			Factory Building		7,35,000
Divya	5,97,200		Plant and Machinery		2,00,000
Yasmin	3,76,400		Furniture		20,000
Fatima	4,50,400		Stock		1,45,000
Aditya	4,50,000	18,74,000	Debtors	1,50,000
Sundry Creditors		77,000	Less: Provision	(30,000)	1,20,000
Public Deposits		1,19,000	Cash at Bank		8,59,000
Outstanding Expenses		9,000	(1,59,000 + 2,00,000 + 50,000 + 4,50,000)

		20,79,000			20,79,000

Question 66: (A and B)

A and B are partners in a firm. The 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, 2024 on which date, the Balance Sheet of the firm was:

Balance Sheet
Liabilities		Rs.	Assets	Rs.
Capital A/cs:			Building	50,000
A	50,000		Plant and Machinery	30,000
B	40,000	90,000	Stock	18,000
Reserve		10,000	Debtors	22,000
Creditors		20,000	Bank	5,000
Outstanding Expenses		5,000

		1,25,000		1,25,000

Following are the required adjustments on admission of C:
(a) C brings in 25,000 towards his capital.
(b) C also brings in 5,000 for 1/5th share of goodwill.
(c) Stock is undervalued by 10%.
(d) Creditors include a liability of 4,000, which has been decided by the court at 3,200.
(e) In regard to the Debtors, the following Debts 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%.
You are required to prepare Revaluation Account, Partners’ Capital Accounts and Balance Sheet of the new firm.

Answer:

Revaluation Account
Dr.			Cr.
Particulars	Rs.	Particulars	Rs.
Bad Debts	2,000	Stock	2,000
Provision for Doubtful Debts	2,000	Creditors (4,000 – 3,200)	800
(4,000 × 50%)
		Loss transferred to
		A Capital	720
		B Capital	480
	4,000		4,000

Partners’ Capital Accounts
Dr.							Cr.
Particulars	A	B	C	Particulars	A	B	C
Revaluation	720	480		Balance b/d	50,000	40,000
				Reserve	6,000	4,000
				Bank			25,000
Balance c/d	58,280	45,520	25,000	Premium for Goodwill	3,000	2,000
	59,000	46,000	25,000		59,000	46,000	25,000

Balance Sheet as on April 01, 2024 after C’s admission
Liabilities		Rs.	Assets		Rs.
Capital A/cs:			Building		50,000
A	58,280		Plan and Machinery		30,000
B	45,520		Stock (18,000 × 100/90)		20,000
C	25,000	1,28,800	Debtors	22,000
Creditors (20,000 – 800)		19,200	Less: Bad Debts	2,000
Outstanding Expenses		5,000	Less: Prov. for D. Debts	2,000	18,000
			Bank (5,000 + 30,000)		35,000
		1,53,000			1,53,000

Working Notes

WN1
old ratio; ½:1/3=3:2

Sacrificing ratio=3:2

WN2
Distribution of Reserve
A will get =10,000×3/5=6,000

B will get =10,000×2/5=4,000

WN3
Distribution of Premium for Goodwill
A will get =5,000×3/5=3,000

B will get =5,000×2/5=2,000

Question 67: (Deepika and Rajshree)

Deepika and Rajshree are partners in a firm sharing profits and losses in the ratio of 3 : 2. On 31st March, 2025 their Balance Sheet was:

Balance Sheet
Liabilities		Rs.	Assets		Rs.
Sundry Creditors		16,000	Cash in Hand		1,200
Public Deposits		61,000	Cash at Bank		2,800
Bank Overdraft		6,000	Stock		32,000
Outstanding Liabilities		2,000	Prepaid Insurance		1,000
Capital A/cs:			Sundry Debtors	28,800
Deepika	48,000		Less: Provision for Doubtful Debts	800	28,000
Rajshree	40,000	88,000	Plant and Machinery		48,000
			Land and Building		50,000
			Furniture		10,000

		1,73,000			1,73,000

On 1st April, 2025 the partners admit Anshu as a partner on the following terms:
(a) The new profit-sharing ratio of Deepika, Rajshree, and Anshu will be 5 : 3 : 2 respectively.
(b) Anshu shall bring in 32,000 as his capital.
(c) Anshu is unable to bring in any cash for his share of goodwill. Partners, therefore, decide to calculate the goodwill on the basis of Anshu’s share in the profits and the capital contribution made by her to the firm.
(d) Plant and Machinery is to be valued at 60,000, Stock at 40,000, and the Provision for Doubtful Debts is to be maintained at 4,000. Value of Land and Building has appreciated by 20%. Furniture has been depreciated by 10%.
(e) There is an additional liability of 8,000 being outstanding salary payable to employees of the firm. This liability is not included in the outstanding liabilities, stated in the above Balance Sheet. Partners decide to show this liability in the books of account of the reconstituted firm.
Prepare Revaluation Account, Partners’ Capital Accounts, and Balance Sheet of Deepika, Rajshree, and Anshu.

Answer:

Revaluation Account
Dr.				Cr.
Particulars		Rs.	Particulars	Rs.
Reserve for D. Debts	4,000		Plant and Machinery	12,000
Less: Old Reserve	800	3,200	(60,000 – 48,000)

Furniture 10,000 × 10%		1,000	Stock (40,000 – 32,000)	8,000
Outstanding salary		8,000
Profit transferred to			Land and Building	10,000
Deepika Capital – 10,680			(50,000 × 20%)
Rajshree Capital – 7,120		17,800
		30,000		30,000

Partners’ Capital Accounts
Dr.							Cr.
Particulars	Deepika	Rajshree	Anshu	Particulars	Deepika	Rajshree	Anshu
Balance c/d	58,680	47,120	32,000	Balance b/d	48,000	40,000
(before adjustment of Goodwill)
				Revaluation	10,680	7,120
				Cash			32,000
	58,680	47,120	32,000		58,680	47,120	32,000

				Balance b/d	58,680	47,120	32,000
				Anshu’s Current A/c (Goodwill)	2,220	2,220	–
Balance c/d	60,900	49,340	32,000
	60,900	49,340	32,000		60,900	49,340	32,000

Balance Sheet as on March 31, 2025 after Anshu’s admission
Liabilities		Rs.	Assets		Rs.
Outstanding Salaries		8,000	Cash in Hand		1,200
Sundry Creditors		16,000	Cash at Bank		28,800
Public Deposits		61,000	Stock		40,000
Outstanding Liabilities		2,000	Prepaid Insurance		1,000
			Anshu’s Current A/c		4,440
Capital A/cs:			Sundry Debtors	28,800
Deepika	60,900		Less: Prov. for D. Debts	4,000	24,800
Rajshree	49,340		Plant and Machinery		60,000
Anshu	32,000	1,42,240	Land and Building		60,000
			Furniture		9,000
		2,29,240			2,29,240

Working notes:

WN1: Calculation of Sacrificing Ratio

	Deepika	Rajshree	Anshu
OLD RATION	3 :	2 :	0
NEW RATIO	5 :	3 :	2

Sacrificing Ratio = Old Ratio − New Ratio
Deepika = 3/5-5/10=1/10

Rajshree =2/5-3/10=1/10

	Deepika	Rajshree
Sacrificing Ratio =	1 :	1

WN2: Valuation of Goodwill
Capitalised value on the basis of Anshu’s share=32,000×10/2=1,60,000
Actual Capital of all partners before adjustment of Goodwill = 58,680 + 47,120 + 32,000= 1,37,800
Goodwill = Capitalised value − Actual Capital of all partners before adjustment of Goodwill
= 1,60,000 − 1,37,800
= 22,200
Anshu’s share of Goodwill =22,200×2/10=4,440
Deepika and Rajshree each will entitle for Goodwill share to be compensated = 4,440×1/2=2,220

Entry

Particulars		Rs.	Rs.
Anshu’s Current A/c	Dr.	4,440
To Deepika’s Capital A/c			2,220
To Rajshree’s Capital A/c			2,220
(Being old partners compensated)

Question 68: (Sunaina and Tamanna)

Sunaina and Tamanna are partners in a firm sharing profits and losses in the ratio of 3:2.Their Balance Sheet as at 31st March, 2020 stood as follows:

Liabilities		Rs.	Assets		Rs.
Capital A/cs:			Plant and Machinery		1,20,000
Sunaina Tamanna	60,000 80,000	1,40,000	Land and Building		1,40,000
Current A/cs:SunainaTamanna	10,000 30,000	40,000	Debtors Less: Provision for Doubtful Debts	1,90,000 (40,000)	1,50,000
General Reserve Workmen Compensation Reserve Creditors		1,20,000 50,000 1,50,000	Stock Cash Goodwill		40,000 30,000 1,50,000
		5,00,000			5,00,000

They agreed to admit Pranav into partnership for 1/5th share of profits on 1st April, 2020, on the following terms:

(a) All Debtors are good.

(b) Value of Land and Building to be increased to 1,80,000.

(d) The liability against Workmen’s Compensation Fund is determined at 20,000 which is to be paid later in the year.

(e) Anil, to whom 40,000 were payable (already included in above creditors), drew a bill of exchange for 3 months which was duly accepted.

(f) Pranav to bring in capital of `1,00,000 and `10,000 as premium for goodwill in cash.

Journalise. (CBSE Sample Paper 2020)

Answer:

Date	Particulars		(Dr.)	(Cr.)
	Debtors A/c Land and Building A/c To Revaluation A/c(Being Increase in Value of Debtors ,Land and Building )	Dr. Dr.	40,000 40,000	80,000
	Revaluation A/c To Plant and Machinery A/c(Being Decrease in Value of Plant and Machinery )	Dr.	20,000	20,000
	Revaluation A/c To Sunaina’s Current A/c To Tamanna’s Current A/c(Being Distribution of revolution profit )	Dr.	60,000	36,000 24,000
	Creditors A/c To Bills Payables A/c(Being Bills exchange accepted )	Dr.	40,000	40,000
	Workmen Compensation Reserve A/cTo Workmen Compensation Claim A/cTo Sunaina’s Current A/cTo Tamanna’s Current A/c(Being Workmen Compensation Claim is transferred to Workmen Compensation Reserve A/c and balance is transferred to partners’ Current A/c)		50,000	20,000 18,000 12,000
	General Reserve A/cTo Sunaina’s Current A/cTo Tamanna’s Current A/c(Being general reserve is transferred to partners Current A/c)	Dr.	1,20,000	72,000 48,000
	Cash A/cTo Sunaina’s Current A/cTo Tamanna’s Current A/c(Being Premium for goodwill is transferred to partners Current A/c in sacrificing ratio)		1,10,000	6,000 4,000
	Sunaina’s Current A/cTamanna’s Current A/cTo Goodwill A/c(Being old goodwill is Written off in old ratio)		12,000 8,000	20,000

Question 69: (X and Y)

X and Y were partners in the profit-sharing ratio of 3 : 2. Their balance sheet as at 31st March, 2022 as follows:

BALANCE SHEET as at 31st March, 2022
Liabilities	Rs.	Assets	Rs.
Creditors	56,000	Plant and Machinery	70,000
General Reserve	14,000	Buildings	98,000
Capital A/cs:		Stock	21,000
X-1,19,000		Debtors 42,000
Y-1,12,000	2,31,000	Less: Provision 7,000	35,000
		Cash in Hand	77,000

	3,01,000		3,01,000

Z was admitted for 1/6th share on the following terms:

(i) Z will bring 56,000 as his share of capital, but was not able to bring any amount to compensate the sacrificing partners.

(ii) Goodwill of the firm is valued at 84,000.

(iii) Plant and Machinery were found to be undervalued by 14,000 Building was to brought up to 1,09,000.

(iv) All debtors are good.

(v) Capitals of X and Y will be adjusted on the basis of Z’s share and adjustments will be done by opening necessary current accounts.

You are required to prepare Revaluation Account and Partners’ Capital Accounts. (CBSE Sample Paper 2023)

Answer:

Revaluation Account
Dr.			Cr.
Particulars	Rs.	Particulars	Rs.
Profit transferred to		Plant and Machinery	14,000
X’s Capital – 19,200		Building	11,000
Y’s Capital – 12,800	32,000	Provision for Doubtful debts	7,000

	32,000		32,000

Partners’ Capital Accounts
Dr.							Cr.
Particulars	X	Y	Z	Particulars	X	Y	Z
Y’s Current A/c	–	24,000	–	Balance b/d	1,19,000	1,12,000	–
Balance c/d	1,68,000	1,12,000	56,000	Revaluations A/c	19,200	12,800	–
				General Reserve A/c	8,400	5,600	–
				Cash A/c	–	–	56,000
				Z’s Current A/c	8,400	5,600
				X’s Current A/c	13,000

	1,68,000	1,36,000	56,000		1,68,000	1,36,000	56,000

Working notes:

1. Treatment of goodwill

Z’s Share of Goodwill =84,000×1/6=14,000

S and Y Will be compensated as follows:

X =14,000×3/5=8,400

Y =14,000×2/5=5,600

Journal entry for adjustment of Goodwill

Z’s capital A/c	Dr.	14,000
ToX’s capital A/c ToY’s capital A/c			8,4005,600

2. Capital adjustments

New capital of firm on the basis of Z’s capital

= 56,000×6/1= 3,36,000

Share of each partner in new capital of firm

Z’s Share of capital is 56,000

Remaining capital of X and Y (3,36,000-56,000=2,80,000)

X =2,80,000×3/5=1,68,000

Y =2,80,000×2/5=1,12,000

Journal entry for adjustment of Capital:

X’s Current A/c	Dr.	13,000
ToX’s capital A/c(Being Capital increased by adjustments)			13,000
Y’s Capital A/c	Dr.	24,000
ToY’s Current A/c(Being Capital Decreased by adjustments)			24,000

Question 70: (Badal and Bijli)

Badal and Bijli were partners in a firm sharing profits in the ratio of 3 :2. Their Balance Sheet as at 31st March, 2019 was as follows:

BALANCE SHEET OF BADAL AND BIJLI as at 31st March, 2019
Liabilities		Rs.	Assets	Rs.
Capital A/cs:			Building	1,50,000
Badal Bijli	1,50,000 90,000	2,40,000	Investments Stock	73,000 43,000
Badal’s Current A/c Investment Fluctuation ReserveBills PayableCreditors		12,000 24,000 8,000 26,000	Debtors Cash Bijli’s Current A/c	20,000 22,000 2,000
		3,10,000		3,10,000

Raina was admitted on the above date as a new partner for 1/6th share in the profits of the firm. The terms of agreement were as follows:

(i) Raina will bring 40,000 as her capital and capitals of Badal and Bijli will be adjusted on the basis of Raina’s capital by opening Current Accounts.

(ii) Raina will bring her share of goodwill premium for `12,000 in cash.

(iii) The building was overvalued by 15,000 and stock by 3,000.

(iv) A provision of 10% was to be created on debtors for bad debts.

Prepare the Revaluation Account and Current and Capital Accounts of Badal, Bijli and Raina. (CBSE 2020)

Answer:

Revaluation A/c
Particulars	Rs.	Particulars	Rs.
To Building A/c To Stock To Prevision for doubtful Debts	15,000 3,000 2,000	By Loss Transferred to:Badal’s Capital A/c – 12,000Bijli’s Capital A/c – 8,000	20,000
	20,000		20,000

Partners’ Capital A/c
Particulars	Badal	Bijli	Raina	Particulars	Badal	Bijli	Raina
To Badal’s Current A/cTo Bijli’s Current A/cTo Balance c/d	30,000-1,20,000	10,000 80,000	40,000	By Balance B/dBy Cash A/c	1,50,000-	90,000-	-40,000
	1,50,000	90,000	40,000		1,50,000	90,000	40,000

Partners’ Current A/c
Particulars	Badal	Bijli	Raina	Particulars	Badal	Bijli	Raina
To Balance B/dTo Revaluation A/cTo Balance c/d	-12,000 51,600	2,000 8,000 14,400	—	By Balance B/dBy I. F . RBy PremiumBy Badal’s Capital A/cBy Bijli’s Capital A/c	12,000 14,400 7,200 3,000-	-9,600 4,800-10,000	—–
	1,05,600	62,400	–		1,05,600	62,400	–

Working Notes:

1. Calculation of Sacrificing Ratio

Sacrifice = Old Profit Share – New Profit Share

Old Ratio of Badal and Bijli = 3 :2

Share of Raina is 1/6

Calculation of new profit sharing ratio

Assuming whole profit sharing ratio is 1/1

Remaining profit sharing ratio is 1/1-1/6=5/6

Share of Badal and Bijli in Remaining share

Badal= 5/6×3/5=15/30

Bijali= 5/6×2/5=10/30

	Badal	:	Bijli	:	Raina
	15/30	:	10/30	:	1/6
	15/30	:	10/30	:	5/30
New ratio =	3	:	2	:	1

Badal’s Sacrifice = 3

Bijli’s Sacrifice = 2;

Raina’s gaining = 1/6

2. Goodwill for 1/6th share of Raina = 12,000

Goodwill payable to Badal and Bijli

Badal=12,000×3/5=7,200

Bijli=12,000×2/5=4,800

3. Capital of the Partners in the New firm on the basis of Raina’s Capital:

Raina’s Capital `40,0000

Raina ‘s Share of Profit 1/6 for that he brings 40,000

Total Capital of the New Firm = 40,000×6/1=2,40,000

Thus,

Badal’s Capital = 2,40,000 × 3/6 = 1,20,000;

Bijli’s Capital = 2,40,000 × 2/6 = 80,000;

Raina’s Capital = 2,40,000 × 1/6 = 40,000;