Laksshya The Taarget , Champions of success

2-C/53 NIT Faridabad, 9910355359

ADMISSION OF A PARTNER
Class 12 - Accountancy
Time Allowed: 1 hour and 30 minutes Maximum Marks: 40

Question No. 1 to 4 are based on the given text. Read the text carefully and answer the questions:
Renu, Suman and Pooja are doing paper business in Ludhiyana. They used to share profits in the ratio of 3:2:1. They
decided to provide notebooks to students of rural area at free of cost. Sheela wants to admit her friend Shivani in their firm.
All others are agreed with Sheela and Renu surrenders 1

4
th of her share; Suman surrenders 1

3
rd of her share and Pooja 1

5
th
of her share in favour of Shivani. Shivani brought ₹ 50,000 as capital and ₹ 20000 as goodwill. In the old partners’ balance
sheet there was an existing goodwill ₹ 25,000. There was an Investment fluctuation Reserve of ₹ 15000 and investment
(book value) ₹ 30,000. At the time of admission of Shivani all assets are revalued and liabilities are reassessed and found
that market value of investment is ₹ 25,000.

1. What will be the new ratio? [1]

a) 24:18:30:45 b) 6:4:2:1

c) 45:40:12:6 d) 135:80:48:97
2. What will be the ratio of Shivani? [1]

a) 3

12
b) 6

12

c) 45

150
d) 97

360

3. What will be the journal entry for existing goodwill? [1]

a) Renu’s Capital A/c 6250 b) Renu’s Capital A/c 12500

Suman’s Capital A/c 6250 Suman’s Capital A/c 8333

Pooja’s Capital A/c 6250 Pooja’s Capital A/c 4167

Shivani’s Capital A/c 6250 To Goodwill A/c 25000

To Goodwill A/c 25000 (Being ...)

(Being ...)

c) Goodwill A/c Dr 25,000 d) Goodwill A/c Dr 25,000

To Renu’s Capital A/c 12500 To Renu’s Capital A/c 6250

To Suman’s Capital To Suman’s Capital A/c 6250

8333
A/c
To Pooja’s Capital A/c 6250
To Pooja’s Capital A/c 4167
To Shivani’s Capital
6250
(Being ...) A/c

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 (Being ...)

4. What will be the treatment of Investment Fluctuation Reserve? [1]

a) Investment Fluctuation b) Revaluation A/c Dr 5,000

Dr 15,000
Reserve A/c
To Investment A/c 5,000
Renu’s Capital A/c 7500
(Being ...)
Suman’s Capital A/c 5000

Pooja’s Capital A/c 2500

(Being ...)

c) Investment Fluctuation d) Investment A/c Dr 25,000

Dr 15,000
Reserve A/c
To Revaluation A/c 25,000
Investment A/c 5000
(Being ...)
Renu’s Capital A/c 5000

Suman’s Capital A/c 3333

Pooja’s Capital A/c 1667

(Being ...)

5. Anita and Babita were partners sharing profits and losses in the ratio of 3 : 1. Savita was admitted for 1/5th share [1]
in the profits. Savita was unable to bring her share of goodwill premium in cash. The journal entry recorded for
goodwill premium is given below:

Date Particular L.F. Debit Amt.(₹) Credit Amt.(₹)

Savita’s Current A/c. Dr. 24,000

To Anita’s Capital A/c. 8,000

To Babita’s Capital A/c.

16,000
(Being adjustment of goodwill premium on Savita’s Admission)

The new profit sharing ratio of Anita, Babita and Savita, will be

a) 5 : 3 : 2 b) 13 : 12 : 10

c) 41 : 7 : 12 d) 3 : 1 : 1
6. Admission of a partner is one of the modes of reconstituting the firm under: [1]
A. The old partnership ended and a new one between all partner (including new partner) comes into existence.
B. The new partnership ended and the old one between all partner(including new partner) comes into existence.
C. The old partnership ended and a new one between all partner(excluding new partner) comes into existence.
D. The old partnership ended and a new one between all partner(excluding old partner) comes into existence.

a) (A) b) (B)

c) (D) d) (C)
7. Deferred revenue expenditure given on the Asset side of the Balance sheet will be: [1]

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 a) Credited to all partners b) None of these

c) Debited to sacrificing partners d) Debited to old partners

8. Which of the following situation is not acceptable for the continuity of the partnership firm? [1]

a) Retirement and Admission on the same day b) Death and Admission

c) Admission of two partners on the same day d) All partners leave the firm together
9. Anand and Nitin are partners sharing profits in the ratio of 3:2. They admitted Jayshree as a new partner for 3/10 [1]
share which she acquired from Anand and from Nitin. Calculate the new profit sharing ratio of Anand,
2 1

10 10

Nitin and Jay.

a) 1:2:2 b) 3:2:2

c) 4:3:3 d) 2:1:1
10. Fill in the blanks: [2]
a) In case of admission of a new partner, the Accumulated Profits, Reserves, Losses and Fictitious Assets
should be transferred to ________ Partners' Capital/Current Accounts in their ________ profit-sharing
ratio.
b) The newly admitted partner brings his/ her share of capital for which he will get ________ share in the
firm.
11. What entry is recorded to distribute General Reserve and the profit and loss A/c balance give in Liability side of [1]
Balance sheet?
12. Atul and Neera were partners in a firm sharing profits in the ratio of 3 : 2. They admitted Mitali as a new partner. [1]
Goodwill of the firm was valued at Rs.2,00,000. Mitali brings her share of goodwill premium of Rs.20,000 in
cash, which is entirely credited to Atul’s Capital Account. Calculate the new profit sharing ratio.
13. Saloni and Shrishti were partners in a firm sharing profits in the ratio of 7 : 3. Their capitals were ₹2,00,000 and [3]
₹1,50,000 respectively. They admitted Aditi on 1st April, 2019 as a new partner for 1/6th share in future profits.
Aditi brought ₹1,00,000 as her capital. Calculate the value of goodwill of the firm and record necessary journal
entries for the above transaction on Aditi’s admission.
14. A and B are partners sharing profits in the ratio of 3 : 2. They admit C into the firm for 3/7th profit which he [3]
takes 2/7th from A and 1/7th from B. C brings ₹60,000 for his share of goodwill and ₹2,00,000 for his capital.
Give necessary Journal entries. Also, calculate a new profit sharing ratio.
15. P, Q and R were on partnership terms sharing profits and losses in the ratio of 6 : 3 : 1. They decide to take S [3]
into partnership with effect from 1st April, 2019. The new profit-sharing ratio between P, Q, R and S will be 3 :
3 : 3 : 1. They also decide to record the effect of the following without affecting their book values, by passing a
single adjustment entry:

Book Values (₹)

General Reserve 1,80,000

Contingency Reserve 30,000

Profit and Loss A/c (Cr.) 90,000

Advertisement Suspense A/c (Dr.) 1,20,000

Pass the necessary single adjustment entry.

16. A and B share profits in the proportions of 3/4 and 1/4. Their Balance Sheet as at March 31, 2018 was as [5]

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 follows:

Liabilities ₹ Assets ₹

Sundry Creditors 4,15,000 Cash at Bank 2,65,000

Reserve Fund 40,000 Bills Receivable 30,000

Capital Accounts: Debtors 1,60,000

A 3,00,000 Stock 2,00,000

B 1,60,000 Fixtures 10,000

Land and Building 2,50,000

9,15,000 9,15,000

On April 1, 2018, C was admitted into partnership for l/4th share on the following terms :
a. That C pays ₹ 1,00,000 as his capital.
b. That C pays ₹ 50,000 for goodwill. Half of this sum is to be withdrawn by A and B.
c. That stock and fixtures be reduced by 10% and a 5% provision for doubtful debts be created on Sundry
Debtors and Bills Receivable.
d. That the value of land and buildings be appreciated by 20%.
e. There being a claim against the firm for damages, a liability to the extent of ₹ 10,000 should be created.
f. An item of ₹ 6,500 included in sundry creditors is not likely to be claimed and hence should be written back.
Record the above transactions (journal entries) in the books of the firm assuming that the profit-sharing ratio
between A and B has not changed. Prepare the new Balance Sheet on the admission of Mr. C.
17. Pass journal entries to record the following transactions on the admission of a new partner: [5]
i. Land and Building is undervalued by ₹2,00,000.
ii. Stock is overvalued by 20% (Book Value of Stock ₹60,000)
iii. Provision to be made for compensation of ₹20,000 to an ex-employee.
iv. Sundry Debtors appeared in the books at ₹1,50,000. They are estimated to produce not more than ₹1,30,000.
v. Creditors include an amount of ₹10,000 received as commission.
vi. A bill of exchange of ₹40,000 which was previously discounted with the banker, was dishonoured on 31st
March, 2018 but no entry has been passed for it.
vii. Value of Machinery is to be decreased to ₹1,20,000 (Book Value ₹2,00,000)
viii. Value of Machinery is to be decreased by ₹1,20,000 (Book Value ₹2,00,000)
ix. Expenses on revaluation amount to ₹8,000 have been paid by partner X.
18. The balance sheet of Madan and Mohan who share profits and losses in the ratio of 3: 2. On 31st March, 2010 [8]
was as follows
Balance Sheet
as at 31st March, 2010

Liabilities Amt(Rs) Assets Amt (Rs)

Creditors 28,000 cash at Bank 10,000

Workmen's Compensation Fund 12,000 Debtors 65,000

General Reserve 20,000 (-) Provision for Doubtful Debts (5,000) 60,000

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Laksshya The Taarget, 9910355359
 Capital A/cs Stock 30,000

Madan 60,000 Investment 50,000

Mohan 40,000 1,00,000 Patents 10,000

1,60,000 1,60,000

They decided to admit Gopal on 1st April, 2010 for 1/4th share on the following terms
i. Gopal shall bring Rs 20,000 as his share of premium for goodwill.
ii. That unaccounted accrued income of Rs 1,000 be provided for.
iii. The market value of investments was Rs 45,000.
iv. A debtor whose dues of Rs 5,000 were written-off as bad debts paid Rs 4,000 in full settlement.
v. A claim of Rs 3,000 on account of workmen’s compensation to be provided for.
vi. Patents are overvalued by Rs 2,000.
vii. Gopal to bring in capital equal to 1/4th of the total capital of the firm after all adjustments.
Prepare the revaluation account, capital accounts of the partners and the balance sheet of the new firm.

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