Profit Sharing lportant exam-oriented RACTICE quest io ns)

Calculation of New
Aand B are
future profit. partners sharing Ratio and
Calcula te profits
new profit in the ratio Sacr
of 3:ific2.ingCisRatio
2
A, BandC are
1/3rd share in partners sharing ratio
sharing profits and losses insacrifice ratio.admi[Newt edRatio
and into the
future profits. par tn ers hip with 1/3 sharein
Calculate the new profit ratio of 4:3 :2. Dis 6:4: intoSacrifice
the = 5; Ratio =3:2
3. Xand Y are partners
took 1/8th from X sharing profits in [New sharing
Profit ratio and
sacrifice admi t e d the partnership for
and 1/24th
from Y. Calthecularatio Sharing Ratio = ratio.:9; Sacrifice Ratio =4:3:
8:6:4:
2
4. Aand Bare
partners te newof5:7.Z was
admi t ed
his share and B sharing profits in the ratio of
profi t sharing ratio of thewith 1/6" share in the profits[7:13:4 which he

A,
surrendered 1/2 of his share in favour 3:2.Cof wasC. admitted as part ners.
a new partner. Asurrendered 1/3rd
Band Care
partners sharing profits in the ratio Calculate new profit sharing ratio of the partners.
share in the profits, of
ratio. which he acquires from A, B 5:3:2. They admit D
[2:1:2)
and in the ratio of
C into partnership giving him 1/2
GoodwilI 2:1:1.Calculate the new profit : sharing
Aand B [10:7:3: 201
are partners
bring in 40,000 as sharing profits and losses in the
profit is 1/5,which hecapital and required goodwill. The ratio of 3:5. Cis admitted into the
partnerrship. Cis to
and receivable by Aand B. acquires goodwill
1/10th from Aand 1/10h from B. is valued at 60,000 for the firm. C's share of
1. Xand Yare
Calculate the amount of goodwll
[GOodwil payable by C=* 12, 000: Both Aand B will receive payau 6,000)
partners in a firm sharing
profits in the
profits. Z brought in 80,000 as his share of ratio of 3 : 2. They admit Z into
sharing ratio of X, Y and Z will be capital and 24.000 as his share partnership
of
for 1/5 Siae
admission. 5:3: Pass necessary journal entries in the
2. goodwill. The new prot
books of the tirm on 3
8. Land M were partners in a firm [Hint: Sacrificing Ratio of Xand Y= 1:1
sharing profits in 4:3 ratio. They admitted O asa new
sharing ratio of L Mand O will be 3:3:4.0brought 2,00,000 for his partner. The new prot
admission was valued at 70,000. O brought his share of goodwill in cash.capital. The goodwill of the firm on Os
and pasS necessary journal entries for the above Calculate sacrificing ratio of Land M
transactions on O's admission.
9. Band Cwere partners in a firm sharing profits and losses in the ratio of 4:3.
[Sacrificing Ratio of Land M= 19:9
They admitted D as a new partner
for 1/4h share in the profits which he acquired from BandC in 3:4 ratio. D brought 1,80,000 for his capital
and 42,000 for his 1/4th share in goodwill.
(a) Calculate new profit sharing ratio of B, Cand D;
(b) Pass necessary journal entries for the above transactions on D's admission. [New Ratio = 13: 8:7
10. Xand Yare partners in a firm sharing profits and losses equally. They admit Zinto partnership as a new partner.
Z paying only 1,000 for premium out of his share of premium of R1,800 for 1/4th share of profit. Goodwill
account appears in the books at 6,000. All the partners have decided that goodwill should not appear in the
on Z's admission.
books of new firm. Pass necessary journal entries in the books of the firm
the ratio of 3: 1. They admitted C as a new partner. The new
I1. Aand B are partners in a firm sharing profits 1:1.C brought 1,00,000 for his capital but could not bring his
profit sharing ratio of A, B and C will be 2: necessary journal entries in the books of the frm for the
(premium) 20,000 in cash. Pass
share of goodwill
for the treatment of goodwill. [Hint: Aalone has sacrified
amount of capital brought in by Cand
Accumulated Profits & Losses
sharing profits in the ratio of 5:3. Onn1 April, 2010, they admitted Zas a new partner for
2. Xand Yare partners
of Z's admission the Balance Sheet ofX and Yshowed a General Reserve of 80,000
1/5th share. On the date in the Profit & Loss Account on theadmission. liabilities side of the Balance Sheet. Pass the
16,000
and a balance of
entries for the treatment of these items on Z's
necessary journal 3: 2. On 1 April, 2010, they admitted Karan as a
profits in the ratio of
partners sharing Sheet of Varun and Rahul showed a General Reserve
B. Varun and Rahul are date of Karan's admission the Balance &Loss Account. Pass the necessary journal entries for
On the in the Profit
new partner. and a debit balance of ? 10,000
of 50,000 items on Karan's admission.
of these
the treatment
 Revaluation ef Aeet and kiabiities FINAL-TOUCH TO ACCOUNTANCY
14, A and B are partnes haring
prorits in the
of the firm for theratio 5 : 3. On 1.4.2010, they admitted C for 1/5th share, Pase
journal entries in he of
() Value of buikding books following revaluations to be made on the admission of C:
() Value of urniture increased
by 50,000.
(W) 1,000 included inreduced by 12,100.
sundry creditors is not likely to be
(v) Unrecorded investments worth 2,000 claimed and hence should be written back.
() Unrecorded liabilities towards suppliers for 900.
Preparation of Revaluation Account, Partners' Capital [Profit on Revaluation: 40,000
15. P& Q are partners sharing
profits &losses in the ratio of 5:3.Accounts
On
and Balance Sheet
Sundry Creditors
Liabilities 31-12-2009, their Balance Sheet was as under:
Assets
Bills Payable 4,000 Machinery 12,000
Capital: 2,000 Stock
P Sundry Debtors 8,000
Q 12,000 Bank Balance 7,200
10,000 500
22,000 Cash in Hand 300
On the above date, the partners 28,000 28,000
(a) The new profit sharing rationdecide to admit 'R' asa new partner on the following terms:
(b) R shall bring R8,000 as will be 7:5: 4 between P, Q and R
capital and 4,000 for his share of goodwill. respectively.
(c) Pand Q will draw half of
d) Machinery is to be valuedtheat goodwill in cash.
15,000, Stock at 10,000 and Provision for bad
created. debts of 1,000 is to be
(e) There is a liability of 2,000 being the
outstanding salary payable to
not included in the creditors.
Partners decide to show this liability in theemployees
books of
of the firm. This liability is
Prepare Revaluation Account, Partner's Capital Accounts and the account.
Balance Sheet of the new firm.
[Profit on Revaluation -* 2,000; Balance Sheet Total-
16. X and Y who were sharing profits in the 42,000)
of admission, the Balance Sheet was as
ratio of5:3 admit Z as partner with 1/5" share of profits. At
follows: the time
Liabilities Assets
Sundry Creditors 41,500 Cash at Bank
Reserve Fund 26,500
Capital A/c: 4,000 Bills Receivable 3,000
Debtors
X 30,000 Stock
16,000
Y 16,000 46,000 Furniture 20,000
Land & Building 1,000
25,000
91,500
The following terms were agreed upon at the time of admission of Z: 91,500
(a) That Zpays 10,000 as capital.
(b) That Z pays 5,000 as goodwill. Half of this sum is to be withdrawn by Xand Y.
(c) That the stock and furniture be reduced by 10%.
(d) 5% provision for bad and doubtful debts to be created on
sundry debtors and bills receivable.
(e) That the land and building be appreciated by 20%.
() There being a claim against the firm for damages and liability to the
(g) An item of 650 included in sundry creditors is not likely to be extent of 1,000 should be created.
claimed.
Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet of the new firm
admission. after Z's
[Profit on Revaluation -* 1,600; Balance Sheet Total-* 1,05,950)
". Ram and Sham are partners sharing profits in the ratio of 2:1. On
1-1-2010, their Balance Sheet is as under:
Liabilities
Assets
Creditors 15,000 Bank
Bills Payable 2,100
5,000 Debtors 24,000
Capital Accounts: Less: Reserve
Ram 2,400 21,600
Sham
25,000 Stock 10,400
10,500 35,500 Furniture 1,200
Investments 3,200
Machinery 5,000
Building 12,000
55,500 55,500
 On the
Gopalabovewill date,
( ) The

Buildasset
brin g they admít
ing s were 8,000 for asGopal
S IGNWENT for 1/4
(©) Reserve
foor 16,bad000;revalued capital and Rshare into 57
()
Furniture to be andMachineryfolows: 2,100 for goodwi partne r ship
on the following terms:
Prepare
Re valu ation taken doubt ful debt-at3the,5s 00;to be
by Ram l .
18. The1
fo l owi ng was the Account , Investments
val ue r
Partners Capital 1,100. 1,400.e duced
of? by ? R2,800; Stock-9,360.
Sundry Creditors Balance
Bills Payable Liabilities Accounts and Balance Sheet new firm.
Sheet of P.O and[PrRofit Revaluation
the - of
2,460: Balance eSheet Total- 66,960)
as on 1
Capital ACCOunts: April, 2010:
P
8,000
3,000 Cash
Assets
750
Bank 2,250
R 20,000 Debtors 6,750
17,500 Stock 19,000
12,500 Furniture
50,000 Investments
3,750
3,500
They share profits
1/10 share and losses in Land &Building 25,000
in the ratio of 61,000 61,000
S
brings inprofits, on the
following 6: 5:3. They agreed to admit Sin the partnership and give him
Goodwill of the firm isas his share ofterms:
10,000
Stock would be 35,000, but capital.
S
by 10% andbrings 2,800 only.
A
provision of depreciated furniture by 450.
The value of Land750&is to be made for outstanding
Building is appreciated upto repair bil.
Investments are valueless.
YOU are 33,000.
required to prepare Revaluation Account Partners' Canital
[Pront On Revaluation -* 1,400: Capitals: P- 22. 100: Accounts and Balance Sheet of the he
Total- 75,950) O- 19.250: R - 13,550; S-? 9,300;
balance
Adjustment of Capftals
9. Aand B are partners sharing profits in the ratio of3:2. Their
Balance Sheet as at 31.3.2010 is given below:
Liábilities Assets
A's Capital 1,80,000Buildings 1,00,000
B's Capital 1,40,000 Plant &Machinery 87,000
General Reserve 60,000 Furniture & Fixtures 90,000
Sundry Creditors 1,20,000 Stock 91,000
Bills Payable 30,000 Debtors 1,52,000
Cash 10,000
5,30,000 5,30,000
On 1.4.2010 they admit Con the following terms:
(a) Cwould bring in 1,50,000 as apital andk 50,000 as goodwill for 1/4th share in profits.
(b) Buildings would be appreciated by 25% and a provision for bad debts would be created for R 2,000.
necessary adjustment being made in cash.
(c) Capital accounts of all partners would be in proit snaring ratio, the Balance
Show Revaluation Account, Cash book, Partners Capital Accounts and Sheet on the admission ofC
TProft on Revaluation-23, 000; Capital AccoUnts: A-* 70,000; B-*by1,80,000; C-R 1,50.000: Cash Rook
B- 13,200: Balance Sheet Total
Balance- 2.07000: Cash brought in Dy A- 10,200 Cash withdrawn
?7,50,000) :5:3 respectively as on 1.1 2010:
Following is the Balance Sheet of A, Band Csnaring profits in the ratio of 6Assets
Liabilities
9,000 Buildingo o 24,000
Creditors 3,000 Furniture 3,500
Bills payable Stock 14,000
Capital: 19,000 Debtors 12,600
A Cash 900
16,000
43,000
8,000
55,000 55,000
give him 1/8th share on the following terms:
They agreed to take D into partnership and as Capital.
Goodwill and 7,000
(a) That Dshould bring in 4,200 as
 188 ADMISSIC

(b) That furniture be FINAL-TOUCH TO ACCOUNTANCY The

(c) That stock be depreciated by 12%. (a)
(d) That a reserve depreciated
of 5% be
by 10%. (b)
created for doubtful debts.
(e) That value of building having (c)
() That after making the
above appreciated be brought upto 31,000.
adjustments,
same proportion as before) be adjusted on the capital accounts of old partners (who continue to share in e)
i.e. actual cash to be paid off or the basis of proportion of D's the
Pass Journal entries and prepare brought in by the old partners as the casecapital to his share in the business
may be.
Balance Sheet of the new firm.
[Profit on Revaluation - 4, 550: Balance Sheet Total-
sharing profits and losses in the ratio of 3: 68,000;
21. A and B are partners in a firm Closing Cash Balance? 9,350
2010 was as follows: 2. Their Balance Sheet on 1
January,
Liabilities
Sundry Creditors 15,000 Plant
Assets
Capital Accounts: Patents 30,000
A
B
30,000 Stock 10,000
25,000 55,000 Debtors 20,00
Capital Reserve 18,000 24
10,000 Cash
Cis admitted as a partner on the above date on the 80,000 2,000
(a) He will pay 10,000 as goodwill for following terms: 80,00
(b) The assets are to be valued as under: one-fourth share in the profits of the firm.
Plant at 32,000; Stock at 18,000;
(c) It was found that creditors include a Debtors at book figure lessa provision of 5% for doubtful
sum of 1,400 which was not debts.
there was a liability for compensation to workers amounting to 2,000.to be paid. But it was also found that
(d) C was to introduce 20,000 as capital and the capitals of the
profit sharing ratio. For this purpose current accounts were to other partners were to be adjusted in the new
be opened.
Give Journal entries to record the above and Balance Sheet after C's
[Loss on Revaluation- 1, 500; Balance Sheet Total - 1,09, 100; admission.
C-* 20,000; Current Accounts: A-*5,100; B- 8,400] Capital Accounts: A- 36,000: B- 24,000:
22. Ram and Rahim sharing profits and losses in the ratio of 3:
profits. He has to contribute proportionate capital. On 30.6.2010,2their
admit Peter as a partner with 1/6h share in
Balance Sheet was as follows:
Liabilities Assets
Creditors 3,559 Cash
100
Bank overdraft
Capitals:
eo4,841 Investments 3,000
Debtors 5,750
Ram 2,800 Stock
Rahim 4,150
2,200 5,000 Fixtures 400
13,400 13,400
It is agreed to make the following adjustments at the time of admission of new partner:
(a) To value the goodwill of the firm at 2,100.
(b) To create a reserve at 10% on the debtors for doubtful debts.
(c) To write down fixtures by 100.
(d) To depreciate stock at 10%.
(e) To increase the value of investments to 3,500.
The capitals of the partners were to be adjusted in profit sharing ratio. Make entries necessary to give effect to
the above arrangement and prepare the amended Balance Sheet immediately after Peter has become a partner.
[Loss on Revaluation - 590; Balance Sheet Total - 14,112; Proportionate capital to be brought by Peter -
952; Capitals: Ram -* 2,856; Rahim - 1,904; Peter - 952; Cash brought in by Ram -* 200; Cash withdrawn
by Rahim -* 200
3. The following was the Balance Sheet of A, Band Csharing profits 8& losses in the proportion of 6:5:3
Liabilities
respectvely:
Assets
Creditors 13,900 Land &Building 50,400
Bills payable 11,300 Furniture 7,350
Capital ACCOunts: Stock 29,400
A 38,900 Debtors 26,460
B 33,600 Cash 1,890
C 17800 90,300
1,15,500 1,15,500
ADMISSION
OF A 189

They agreed to
TThat D
shoul PARTNER-AS TGNMENT
taked into
D
(OThatThat fustockrniturbee bebring in par14,tr7e00rshbyipasandhis gve
depr ecat e
lm 1/8th share on
the following terms:
(d) That a
reserve depr
ofR eciate d byd 10%. 920. capital.
That the 1,320 be It is
That value of Land & made for
cash. of
repair bills. in
adjustment
goodwill
decided
the
goodwi l of the Bui
firmldinbeg be approutescitaanditedng by 14,700. of
share for the
goodwill. among the partn ers to
foxed at 8, 820 and D could not bring his
of
the
firm
continue
sharein
to in the
In That open D's account in the books
his share
after
the same making above the Current partners (who
capital to
be. Sheet of the
Oass business,
proport
i.e., io n as
cashabove)
adj ust m ent s the capital accounts of the
to be bepaidadjoffustored on the inbasis
of the
old D's
Proportionof case may
the Balance
Journal entriesactual
as
partners,the amended
by the old prepare Capitals.:
to give
firm as newly constituted. effect to the above arrangements and brought 1856750:
Balance
rProfit on
A-44,100;Revaluation-
Cash
Cosing respectively. The
B-R 36,750;9,520;
C- Balance Sheet Total - 1,44,120; 3:2
22,050: D-
Kisnore were partners in a firm, 14,700]Profit and Losses in the
A Ashok and ratio of

followingis the Balance Sheet of the firm as onsharing 2,000

Liabilities 31.3.2010: Assets 28,000
28,000
Creditors 30,000 Cash
Bills payable 15,000
20,000 Bank 33,000
Capitals: Debtors 44,000
Ashok Stock
60,000 1,50,000
Kishore 40,000 1,00,000 Plant
Buildings followingterms:
profits on the adjustments
1,50,000
1/4th share in
the
firm, after all
They agreed to admit Vinod with effect from 1.4.2010 with athe capital of the new
(a) Vinod will bring in capital to the extent of 1/4th of
(including goodwill) have been made. depreciated by ? 3,000. is
and Plant to be in cash. It
(b) Buildings are to be appreciated by 8,000 3,000. his share of goodwilladjustment of
(c) The provision for debtors is to be created 30,000. Vinod could not bring of the firmfor the
books
(d) The goodwill of the firm was valued at Current account in the immediately after
decided among the partners to open Vinod's the firm
Balance Sheet of
goodwill.
Partner's capital accounts and the
Prepare the Revaluation account, Ashok-65,700; Kshore -
Vinod's admission. 1,96,000; Capitals:
Total-
Revaluation -2, 000 Balance Sheet partner for
[Profit on
43,800: Vinod-* 36,500) 1.4.2009, they admitted Z as a new
3: 1 ratio. On as follows:
partners in a firm sharing profits inTheir Balance Sheet on that date was
25. Xand Y were the firm which he acquired from X. Assets 50,000
1/4" share in Building 60,000
Liabilities 54,000 Land and
32,000 Machinery 15,000
Creditors Stock
General Reserve 40,000
Debtors debts 3.000 37,000
Capitals: 1,00,000 1,70,000Less: Provision for bad 50,000
X 70,000 Investments 44,000
Cash 2,56,000
2,56,000
were:
and other terms agreed upon
40,000 as his capital 24,000.
Zwill bring the firm was valued at 70,000.
of
) Goodwill Building were valued at excess by 800.
(0) Landand for bad debts was found to be in not likely to arise. firm.
(ii)Provision &2,000 included in creditors was basis of Z's contribution of capital to the
(iv) A liability for the
partners be adjusted on to cCurrent accOunts.
capitals of the
(v)The shortfall, ifany, to be
transferred
and the Balance Sheet of the new firm. Y-40,000: Z-
(vi) Excessor Partner's Capital AccountsTotal-322,800; Capitals: X-* 80, 000;
Prepare Revaluation A/c, Balance Sheet (Dr.)
22800; 6,000
[Profit on Revaluation -* X-* 67,100(Cr.); Y-* 43, 700 (Cr.); Z-*
40,000; Current Accounts: