S e n a -

CHAPTERR

Partnership Accounts
2 Admission of a Partner J
Note: Please see all Problems of this Chapter in page nos.
P-II/IV/2-28 to 2-39 in Text Book Practical Problems
of Same Chapter.

[ CALCULATION OF NEW PROFIT SHARING RATIo

sOLUTION OF PROBLEM 1
(a)Supposethe total profit is 1
C takes 1/8 share out of 1

Remaining share 1-
A's new share 21
8 32
B's new share

Newratiois A: B:C 32 21:7:4

0 A's old share is out of which he gives 31 to C.

A's new share

B's share is to C
Out of which he gives32
B's new share
New ratio is A: B:C= =a2
23 32
5 32 23:5:4
9
A's share isand he surrenders 32 o 4
3
As new
i.e. 4 128
share is 96-3 93
128 = 128 128
 FANTINCROT PARTNERSI ER
I1-IV/2-2 ER
I1-IVI2-3
3 Given to Z
B's old share is and he surrenders ofshare i.e. 10

4 32
3 3
128
Y's new share
- 1010
B's new share = 4 128 32-3
128 28
Z's share
0

X:Y:Z 10 T0 i05:3:2
C's share 128
128 128
29 6 X's old share
=Sacrificed to Z20
New ratiois A : B:C 128' 128 128 (iv)
=93:29:6 X's remaining share =-20 20 -20

(o)Asurrenders 1010 Y's old share Sacrificed to Z =

B's share 10 10 10 Y's remaining share

-S_8-3 5
Bsurrenders =1010 Z's share 20
4

B's share10100 X:Y:Z

20 20 20 11:5:4
Cs share 1 0 0 0
Therefore new profit sharing ratio of A : B:C =6:2:2or 3:1:1 () X's old share
(e) () Suppose the total share is 1. Surrendered to Z
The new partner Z gets out of 1.
X's new share
Remaining share -1- 4

X's new share =

Y's share
-
Z's sharee
Y's new share
. X:Y :Z
-2:2:1
x:Y:Z 25 225 12:8:5 (vi) Y's old share
(i) Z gets 2 th from X and th from Y.
Surrendered to Z
X's old share

Y's new share

X's new share
5 20
Y's old share = X's share

Y's new share

- - Z's share
5
X:Y:Z 20 20 : 9:7:4
20 20 X:Y:Z 3:1:1
(in) X's old share =
5 Sacrificing Ratio = Old Ratio- New Hao
1
Given toZ
10 nlicns =-a-a*
X's New share 3

Y's old share

1010 10 Bsacrifices--444
Sacrificing Ratio of A:B =1:2.
 PARTNERSHIP ACCO

PARTNER
PARTNERSHIP ACCOUNTS-ADMISSION OF A PART
I1-IV/2-4 Capital
Acs: I-IV/2-5
to
To
Profit 4,530
LIABILITIES
REVALUATION OF ASSETS AND A 3,020
B 7,550
sOLUTION OF PROBLEM 2(a) 9,650
JOURNAL ENTRIES 9,650
SOLUTIONOF PROBLEM 2(c)
Dr 3,000 JOURNAL ENTRIES
Revaluation Alc
To Stock AAc 2,000
To Furniture 1,000 2016
11 Revaluation A/c Dr
furniture) 950
(Being reduction in value of stock and To Stock A/c
,000 Fixtures and Fittings A/c 500
Building ANc Dr.
Dr. 4,000 "Provision for Doubtful Debts A/c 250
Investment A/c 200
Dr. 1,000 (Being depreciation in the value of assets and a provision
Sundry Creditors A/c
To Revaluation Alc 27,000 for doubtful debts made)
or reduction in liability) Freehold Premises Ac Dr. 1,000
(Being appreciation in the value of assets To Revaluation A/c
Dr. 24,000 1,000
Revaluation Alc
To M's Capital A/c 15,000 (Beingappreciation in the value of freehold premises)
Revaluation A/c Dr. 50
To N's Capital Alc 9,000 To A's Capital A/c 50
(Being profit on revaluation distributed in the profit sharing ratio)
(Being profit on revaluation transferred) Dr. 750
REVALUATION ACCOUNT April 1 A's Capital Ac 500
To Cash 250
To Investment
Stock A/c 2,000| By Building A/c 22,000
(Being cash and investment not taken over by the
o Furniture Alc 1,000 By Investment Alc 4,000 partnership transferred to A's Capital Ac)
ro Profit to Capital A/cs by Sundry Creditors Alc 1,000
M 15,000 BALANCE SHEET
N 9,000 as on 1st April, 2016
24,000 Asseis
Liabilities
27,000 27,000 4,000
Creditors 3,000 Debtors 200
12,800 Less: Provision 3,800
A's Capital
sOLUTION OF PROBLEM 2(b) 00
Stock
REVALUATION ACCOUNT Fixtures and Fittings
Freehold Premises
7,000
15,800
To Debtors A/c 2,000| By Building ANc 10,000
To Profit to Capital A/cs 15,800
Kannan 5,000
Sundar
,000

8,000
SOLUTION OF PROBLEM 3
REVALUATION ACCOUNT
10,000 9,500
10,000 400
To Stock 2,000 By Buildings
Note: Raising goodwill, for 16,000 will not affect the preparation of Revaluation Account. Plant 3,500
Investments

sOLUTION OF PROBLEM 2() Provision for D/D 485

Profit transterred to Capital
REVALUATION ACcOUNT Accounts:
B 2,610
To Provision for D/D Alc 9,900
1,250 By Building Ac
7,500

1,305
To Furniture Alc
To Liability Alc
250 By Investment Alc 2,150
3,915
600 9,900
 ACCOUNTS-ADMISSTON OFAPARTNER
I-IV/2-6
PARTNERSHIP ACCOUNTS-ADMISSION OF A PA FAPARTNER PARTNERSHIR
66,000
-V2:7
Reversal of entry for increase Average profit =
7 By rate of profit = 10%
in liability and decrease in
decrease
To Reversal of entry
for Normal
in liability and
increase in
9,900
the value of assets
5,985 Capital value
of profit = 66,000x
66.000
0 100 =7 6,60,000
the value of assets Transfer to
A 1,740 Goodwill = Capitalized value of profit- Actual Assets
B 870 (Assets- Liabilities)
1,305
Goodwill = 7 6,60,000-F5,00,000
3,915 7 7,00,000-F 2,00,000)
(i.e., =

9,900 ,90 1,60,000

Total profit =7 40,000+ ? 45,000 + 50,000+755,.000= 1,90,000
CAPITAL ACCOUNTS
(d
1,90,000
A Average profit = 47,500
By Balance b/d 30,000 20,000| 20
Return on Capital 1,50,000x100
To Profit on 30,000
Profit on
"
Less:
Revaluation
written back 1,740 870 1,305 Revaluation 2,610 1,305
Balance c/d 30,870 20,435 13,695 Cash 15,00 Super Profit 17,500
32,610 21,305 15,000 32,610 21,305 15.00
Goodwill = 17,500x 4 = 70,000
OPENING BALANCE SHEET
7 28,000
Assets Total profit 7 20,000+7 22,000+7 24,000+ 26,000+
Liabilities (e) =

16,200 +7 30,000 = 7 1,50,000

Creditors 65,900 Cash at Bank
Capitals Sundry Debtors 9,700
20,000
Average profit= 71,50,000
6
25,000
30,870 Stock
35,000
B 20,435 Plant 50,000
Goodwill =7 25,000 x 3 =7 75,000
C 13,695 Building
65,000 Surender's share = 7 75,000x = 15,000.
1,30,900 1,30.900
TREATMENT OF GOODWILL

METHODS OF GOODWILL SOLUTION OF PROBLEM 5

JOURNAL ENTRIES
sOLUTION OF PROBLEM 4
70,000
Dr. 70,000
(a) Profit for the last five years (0(a)CashAlc
Total profits =7 4,800+7 7,200+ 10,000+7 3,000 To Ritu's Capital A/c
and capitaly 50,000
+5,000 =7 30,000 eing cash brought in as goodwill Dr. 37,500

Average profit = 00f6,000 (6)GoodwillA/c

To Rajani's Capital ANc
12,500

5
To Rajan's Capital A/c
Value of Goodwill =7 6,000x3 to old partners capa
18,000 goodwill raised and credited
(b) Net Profit =* 36,000 g 30,000
accounts) Dr. 10,000
Less: Interest on Capital 2,00,000x
100 20,000
()Rajani'sCapital Alc Dr.
Dr.
10,000
50,000
Rajan's Capital A/c
The remuneration of the partner Ritu's Capital A/c
6,000 26,000 To Goodwill A/c new profit
their
in
10,000 (For 00dwill debited to all
partners
and (©),
one entry
of (b)
Value of Goodwill R 10,000
Sharing ratio) (Alternative: Instead
can be done as under
=
x 2=7 20,000
 IP AC
PARTNERSHIP o nNER

PARTNERSHIP ACCOUNTS-ADMISSION OFA PARTNE

NER I-IV/2-9
I-IV/28
Ritu's Capital A/c
Dr. 10,000 A's Capital A/c
Dr.
To Rajani's Capital A/c 7,500 B's Capital A/c Dr. 7,500
To Rajan's Capital ANc 2,500 To Goodwill A/c 2,500
(Being old partners' capital
accounts credited in sacrificing value of goodwill writtern of
ratio i.e. 3 1 and debited to new partner's capital
(Being the existing 10,000
account) Cash Alc Dr.
To C's Capital
A/c 2,000
Rajani sacrilices (Amount of cash brought as goodwill credited to C's 2,000
Rajan sacrifices - 2 0 Capital A/c)
Sacrificingratio =3: 1 Goodwill A/c Dr.
9,600
Dr. To A's Capital A/c
(i) Cash ToA/cC's Capital A/c 1,000 7,200
To B's Capital A/c 2,400
1,000
(Being the amountbroughtin by C,credited to his Ac) (Goodwill raised for full value)
Goodwill Ac Dr. 4,200 A's Capital A/c Dr. 4,320
To A's Capital A/c B's Capital A/c Dr. 1,440
To B's Capital A/c
2,520
1,680 C's Capital A/c Dr. 3,840
(Being Goodwill raised at full value and credited to old
To Goodwill A/c 9,600
Partners' Alcs)
A's Capital A/c Dr.
(Goodwill written off in new profit sharing ratio ie., 9:3
880
B's Capital A/c Dr. 720 :8)
C's Capital A/c Dr. Dr. 8,000
1,200 ( Cash A/c
To Goodwill A/c 8,000
2,800 ToC's Capital Ac
(Being goodwill worth 7 2,800 being written off in new
profit ratio 11:9:15) | (Being amount brought in as Capital by C) 9,000
Dr.
Goodwill A/c
Working Note: 4,500
New Ratio of A, B andC To A's Capital A/c 4,500
To B's Capital A/c
C acquires from A
(Being goodwill credited to old Partners Capital
C acquires from B Accounts in the ratio of 1 1)

Note. The value of under

A's new share is goodwill is calculated as
=
-= =
Bs new share is
35
For the Capital is 8,000o
Total value of business
C's Shar =or5
A:B:C Ratio is 11:9:5.
x8,000 =7 32,000
a u e of Goodwill =Total value of business- Actual Capital of an parulei

(i) Cash c 32,000- 23,000

Sundry Debtors Dr. 1,000 9,000.
(vi) Old Ratio
Stock Dr. of X, Y and Z
5,000
Machinery Dr. 6,000
To C's
Capital A/c Dr.
5,000
(Beingthe amount of various assets credited 17,000 New Ratio of Y
X, and Z
Capital Ac) to C's
C's Capital A/c
To A's Capital A/c Dr.
6,000
To B's
(Being amount
Capital A/c 4,000 Xloses- share
Y's share
through capital A/c)of
C's share of 2,000
goodwill adjusted does not change
Note The Goodwill will
appear in the Balance Sheet at
5,000. Z
Zgains-
must pay of ? 36,000 i.e., 7 4,000 to X.
 PARTNERSHIPACCOUNTS-ADMISSION OFA PAR
CHIP A.
OF
PARTNERSHIP ACCOUNTS-ADMISSION A PARTNER
I-IV/2-10 OF
PROBLEM 7 -VI2-11
LUTION
entry will be JOURNAL
For this, the
Dr. ,000 Revaluation A/c
Z's Capital Alc Dr.
4,000 To Plant Alc 5,000
To X's Capital A/c because of change in for Doubtful Debts
of goodwill To Provision 4,000
(Being the adjustment Reing the depreciation on Flant and provision for doubtful
1,000
profit sharing ratio)

PROBLEM 6
debt
A's Capital A/c
sOLUTION OF 3,125
JOURNAL ENTRIES B's Capital A/c
1,875
To Revaluation A/c
Dr. 9,925 on revaluation transferred to Capital A/cs) 5,000
Revaluation A/c (Being loss
To Stock Ac 5,000 Cash A/c r.
44,000
To Plant & Machinery A/c 4,300 To C's Capital
A/c
Debts 625 40,000
To Provision for Doubtful To A's Capital A/c 2,500
the depreciation on the value
of assets) A/c
(Being To B's Capital 1,500
to C's Capital A/c
Dr. 5,955
(Being cash brought
as
capital credited
A's Capital A/c
B's Capital Ac
Dr. 3,970
and cash brought as goodwil credited to other partners in
To Revaluation A/c 9,925 the old ratio)
revaluation transferred to old partners' 42,500
(Being loss on Bank A/c
Capital Accounts) 42,500
To C's Loan A/c
Dr 20,000 loan from C)
Bank A/c (Being
To C's Capital A/c 20,000 Dr. 42,500
Bank Overdraft A/c
(Being cash brought in as C's Capital) 42,500
To Bank A/c
C's Capital A/c Dr. 12,000 (Being overdraft paid)
To A's Capital A/c 7,200
To B's Capital A/c (C 4,800 BALANCE SHEET OF M/S A, B&C
(Being C's share of 'goodwill' adjústed in the books) Assets
Liatbilit 51,,500
BALANCE SHEET OF M/S A B & C at Bank
Sundry Creditors 15,000 Cash 10,000
as on 1st January, 2016 C's Loan A/c 42,500 B/R 20,000
Liabilities Assets Sundry Debtors
Capital A/cs Less: Provision for DID 1,000
Creditors 40,000 Cash at Bank 22,000 29,3 19,000
24,375
Capital A/Ves Debtors 8 19,625 30,000
35,000
A 41,245 Stock 40,000 Stock 40,000
38,700 and Machinery
B 30,830 Plant & Machinery 89,000 Plant 4,000
8,000 ( 43,000-F 4,300) |Less: Depreciation 36,000
80,075 1,20,075 1,46,500
1,20,075
1,46,500

Working Note
CAPITAL ACCOUNTS OLUTION OF PROBLEM18 Amount (
B AB REVALUATION ACcOUNT
Particulars
7,500
Particulars Amount (R)|
To Capital A/cs 12,000 By Balance b/d 40,000 30,000 2 0 , 0 0 0

To Furniture 240
Building
To Revaluation Bank A/c
Alc (Loss) 5,955 3,970 C's Capital A/c 4,800 To Stock
7.200 1,140
To Balance cld
41,245|30,830 8,000 To
Provision for Debtors 540
47,200|34,800 20.00
47,200 34,800 20,000 o Bils
Discounted Liability 1,080
 99

CAPITAL ACCOUNTS

B Particulars B C D
Particulars

By Balance b/d 16,800 12,600 6,000

To Cash (Goodwill withdrawn) 1,500 1,500| 1,500
By Revaluation A/c 1,500 1,500| 1,500
To Balance cld 19,800 15,600 9,000 15,000
By Cash 15,000
By Cash (Goodwill Premium) 3,000 3,000 3,000
15,000
21,300 17,100| 10,500| 15,000 21,300| 17,100| 10,500
 PARTNERSHIP ACC DoON OF A PARTNER
PARTNERSHIP ACCOUNTS-ADMISSION OFA PARTNER
I1-V/2-14
Revaluation A/c I-IV/2-15
CAPITAL ACCOUNTS To A's Capital A/c Dr.
3,600
Active Sharp Blunt Active Sharp Blunt To B's Capital A/c
(Being profit on revaluation transferred to Capital A/cs) 2,160
1,440

6,000 4,000
By Balance cld 30,000 25,000 Reserve Fund A/c
Dr.
To A's Capital A/c 10,000
To Goodwll 4,800 By sh
To Partners' Capital Alcs
26,400 23,400 15,200 By Blunt's Capital
A/c
2,400 2,400 20,000 To B's Capital A/c
6,000
To Balance cld
32,400 27,400 20,000 (Being the distribution of reserve fund) 4,000
32,400 27,400 20,000 Bank Ac Dr.
To A's Capital A/c 20,000
SOLUTION OF PROBLEM
10 To B's Capital A/c 3,000
To C's Capital A/c 2,000
JOURNALENTRIES Bei goodwill credited to A & B and Capital broug by 15,000

Dr.
C)
Arul's Capital A/c 480
Babu's Capital A/c Dr. 320 REVALUATION ACCOUNT
To Goodwill Alc 800
(Existing goodwill written off) To Plant A¢ 3,500 By Land &Building 5,000
To Furniture & Fixtures Alc 150 By Stock 4,500
Cash Ac 8,400
To Provision for Doubtful Debts Ac 2,250
Charle's Capital AC 200 To Profit to Capital Ac:
To Charles Capital Alc 8,000 2,160
To Arul's Capital A/c
To Babu's Capital A/c
360 B 1,440
240 3,600
(Being
made)
amount brought as capital and adjustment for Goodwill is 9,500 9,500

Reserve Ac Dr. 2,000 CAPITAL ACCOUNTTS

To Arul's Capital A/c
1,200
To Babu's Capital A/c 800 B C A B
(Being reserve credited to old partners)
To Balance c/d 46,160 42,440| 15,000 By Balance b/d 35,000 35,000
BALANCE SHEET OF ARUL, BABU &CHARLES By Revaluation
Liabilities Account 2,16 1,440
Assets By Reserve Fund 6,000 4,000
Capitals By Bank 3,000 2,000 15,000
Arul Sundry Assets 17,200
46,160 42,440 15,000
Babu 11,080 Cash 8,400
46,160 42,440 15,000
Charles 6,720
800
BALANCE SHEET OF MS A B &C
25,600 25,600 a s on 1-1-2016

SOLUTION OF Liabilities Asse

PROBLEM 11 25,000
Creditors 52,000 Bank 5,000
JOURNAL ENTRIES Capital A/cs Stock 45,000
A
,160 DebtorsProvision 2,250
Revaluation Alc
42,440 Less: for D/D 42,750
To Plant ANc Dr. 5,900 3,500 15,000 1,500|
To Furniture 150
To
&Fixtures Alc 150
1,03,600Furniture
Less: Depreciation 1,350
Provision for Doubtful Debts
Being A/c 2,250 35,000
depreciation in the value of assets) Plant&Machinery
Land and 3,500 31,500
Building A/c Less: Depreciation
Stock A/c 30,000
Dr. 5,000
To Revaluation A/c Land and Building 1,55,600
Dr. 4,500 50U
(Being appreciation in the value of
assets) 1,55,600
 -ADISSONOF
PARTNERSHIP ACCOUNISADMISSION OF AA PARTNED PARTNERSHIP ACcOUNTS-ADMISSION OF APARTNER
I-IV/2-16
-VI2-17
PROBLEM 12 Working Note:
sOLUTION OF
JOURNAL ENTRIES CAPITAL ACCOUNTS
Sanjay Bijay Rajib
Revaluation A/c
Dr. 5,800 Sanjay Bijay Rajib
To Revaluation A/c 1,080 720
By Balance b/d
To Stock ANc 4,0
To Provision for
Doubtful Debts A/c To Current Alc 52,920 45,280 By Reserve Fund 60,000 50,000
800 To Balance c/d 36,000 24,000 20,000 By Cash 18,000 12,000
the value of assets)
(Being depreciation in 12,000 8,000 20,000
Building Alc
Dr. 4,000 90,000 7o,000 20,000 90,000 70,000 20,000
To Revaluation A/c 4,000
(Being appreciation in the value of Building) OF PROBLEM 13
sOLUTION
Sanjay's Capital A/c Dr 1,080 REVALUATION ACCOUNT
Blijay's Capital A/c Dr. 720
To Revaluation A/c 1,800 To Provision
for Bad and By Stockin-Trade 2,500
(Being loss on revaluation transferred to capital accounts) Doubtful Debts 550" Land and Buildings 5,000
"Furnitureand Fittings 650
Reserve Fund A/c Dr. 30,000 Profits on revaluation
To Sanjay's Capital A/c 18,000 transferred to Partners'
To Bijay's Capital Alc 12,000 Capital Accounts:
(Being distribution of reserve fund among the partners)
A 2,520
Cash Alc Dr. 40,000 B 2,520
To Sanjay's Capital A/c 12,000 1,260
To Bijay's Capital A/c 8,000 6,300
To Rajib's Capital A/c 7,500
20,000 7,500
(Being Goodwill credited to old partners & capital brought by Rajit)
CAPITAL ACCOUNTS
Sanjay's Capital A/c Dr. 52,920
Bijay's Capital A/c
To Sanjay's Current Alc
Dr. 45,280 C A C
52,920
5,000
To Bijay's Current A/c 45,280 To Capital Accounts 2,000 By 12,000 12,000
Balance b/d

(Excess Capital transferred to Balance c/d 19,120 18,120 7,560 3,000 |By D's Capital
partners current 1,000 1,000
accounts) Account

Revaluation
Alc 2,520 2,520 1,260
BALANCE SHEET OF M/S SANJAY, BIJAY AND RAJIB General
Liabilities Reserve 2,600 2,600 1,300
Assets
Sundry Creditors Outstanding9
54,000 ,00a
30,000 Cash (7 14,000 +7 40,000) Liabilities - | 5,000
Current Accounts
Sanjay Debtors ,000 Cash
5,000
Bijay
52,920 Less : Provision for 19,120 18,120 7,560
Capital A/cs 45,280 Doubtful Debts 1,800 19,120 18,120 7,560 5,000 7,560 3,000
34,20

Balance b/d 19,120 18,120

Sanjay By
36,000 Stock
3 6 , 0 0 0

Bijay
24,000 Furniture
20.000

Rajib C &D
20,000 Building 64,000

BALANCE SHEET OF M/S A, B,

as on 1st April, 20165
Assets
2,08,200 Liabilities 30,000

Sundry Creditors
2,08,200

Buildings 5,850
12,850 Land &
Outstanding Liabilities
apital
500 Furniture
|Stock of Goods
14,250

Accounts of Partners .
 PARTNERSHIP ACCOUN
TARINER IP ACCOUNISADDSION OF APARTNER
P A R T N E R S H I PA C C Ó U

I1-IV/2-18 Sundry Debtors

L e s s : Provision
5,500
550
Sohan (7 20,000
Stocks HVI2-19
+71,000+ 550) 21,550 Furniture and Fixtur
19,120
4,950 15,000 23,000
18,1 Cash in hand Land and Buildings 2,000
B 7,560 Cash at Bank
0 Jag 69,650 Commission Receivable 36,000
3,000
5,960 1,15,250 1,000
47,800
61,150 1,15,.250
61,150 Ratio
Future Profift Sharing
Total
P R O B L E M 14
SOLUTION OF Jag's Share
JOURNAL ENTRIES

Cash Account
Capital Account
Dr. 21,000
15,000
Balance Share
-
To Jag's
Mohan's Capital Account
4,000
To Mohan's Share
Capital Account
2,000 2
To Sohan's on his
as capital and goodwill
(Amount brought in by Jag
ACcOunts)
admission creditedtoold partners Capital
Sohan's Share

Mohan's Capital A/c

Dr. 2,000
1,000
Sohan's Capital AcC
To Cash Account
Dr.
3,000
The Ratio is : or2:1:1.
partner
(Half theamount of goodwill withdrawn by each Dr. 6,550 sOLUTION OF PROBLEM 15
Revaluation Account JOURNAL ENTRIESS
To Provision for Damages 1,500
Electricity Expenses Outstanding 1,300
To Stock 2,000 Dr. 20,000
1,000 Bank A/c
To Furniture and Fixtures 20,000
750 Capital A/c
To Jitender's
To Provision for Doubtful Debts Capital)
(Various provisions to be made and assets to be written (Being amount brought by Jitender as 20,000
down as per agreement on admission of Jag) Goodwill Alc 15,000
Land and Buildings Dr. 6,000 To Dilip's Capital ANc 5,000
1,200 To Amitabh's Capital Alc
Sundry Creditors Dr.
Commission Receivable Dr. 1,000
Being goodwill raised on Jitender's admission)
To Revaluation Account 8,200 Dr. 10,000
Dilip's Capital A/c Dr. 6,000
(Appreciation in value of land and buildings and reduction
Amitabh's Capital Alc 4,000
in amounts due and commission receivable brought into
Jitender's Capital A/c
Dr.
20,000
books on Jag's admission)
Revaluation Account To Goodwill Alc
Dr. 1,650 the profit sharing
ratio
of
5eing goodwill written off in
new
To Mohan's Capital Account ,100
To Sohan's Capital Account 550 :3:2) Dr.
7,900
7,000
(Profit on revaluation of assets and liabilities credited to Revaluation Account 900
Mohan and Sohan in the profit sharing
ratio) To Plant & Machinery A/c
Ac
o Provision for Doubtful Debts
BALANCE SHEET OF Ws of plant and machineryoy
MOHAN, SOHAN AND JAG 5eing depreciation in the value
for doubtful debts by 0
as on April 1, 2016 cUand increase in provision 5,000
Dr. 5,000
Liabilities
Sundry Creditors
Assets 35,000
|Land
and Buildings A/c
To Revaluation A/c
42,800 Cash
Expenses Outstanding of land and buildings 2,175
1,300 Sundry Debtors 15,000 eing increase in the value Dr. 725
Provision for Damages 2,900
1,500 Less: Provision Dilip's Capital A/c Dr.
Capitals for
Doubtful Debts 750 Amitabh's Capital Ac
Mohan (7 30,000 14,250
To Revaluation A/cc old
to the
+ 2,000 +7 1,100) 33,100 4,000 transferred
| Bills Receivable on
revaluation
partneSS
partners in their old ratio of 3 :1)
 PARTNERSHIP ACCÓU
ACCOUNS=ADooldN OFA PARTNER
PARTNERSHIP ACCOUNTS-ADMISSION OF A PARTNER

I1-V/2-20
A, B &X I-VI2-21
Dr. 12,825 BALANCE SHEET
as on 1-4-2016
Dilip's Capital A/c
12,825
To Bank Alc Capital of
the required Assets
Capital than
Liabilties

excess
(Being
) ,000 Cash in Hand
T 40,000 withdrawn
S u n d r yC r e d i t o r s

Dr. 725
CapitalA/cs
44,050
Stock 50,000
Bank Ac
Amitabh's Capital
A/c 725 27,7
Sundry Debtors 13,500
To Amitabh to make
his Capital
25,000
Less: Provision for Bad 20,000
(Being amount brought by 24,000 in the
new B
&Doubtul Debts
Capital of R 96,750
equal to the required 750
firm) Plant&Machinery
Furniture &Fitings
19,250
of goodwill for t share = 7 16,000 15,000
Jithender's Capital after adjustment
10
1,01,750 4,000

Firm R 16,000x= 80,000 1,01,750

Capital ofthe
=
Therefore,
Working Note
40,000 Ratio
Dilip'sCapital
= F80,000 x )
Calculation of Sacrificing

1 24,000.
Amitabh's Capital = { 80,000 x
A-1i5
FIRM
BALANCE SHEET OF THE NEW

Liabilities Assets B--15

14,000 Cash at Bank 12,500 4:1
Sacrificing ratio of A: B
=
Bills Payable 16,000 4,600+ 20,000 .
Sundry Creditors

Capitals
-7 12,825+7 725] Goodwill 15,000 will be credited to A and B's Capital Accounts on the ratio of
Sundry Debtors 20,00
Dilip 40,000 4:1.
Less: Provision 1,500
Amitabh 24,000 18,500
16,000 SOLUTION OF PROBLEM 17
Jitender 15,000
80,000 Stock REVALUATION /C
6,000
Patents
Plant& Machinery 28,000
Land &Building 30,000 4,000
ToPartners Capital A/cs By Goodwill 15,600
,10,000 A 7,800 By Land& Building
1,10,000
By Furniture Alc 3,800
B 15,600
23,400 23,400
sOLUTION OF PROBLEM 16 23,400
REVALUATION ACCOUNT CAPITAL ACCOUNTS

To Plant and Machinery A/c 5,000 By Loss to Capital A/c

To Stock 1,500 A 4,950 To Balance cld 26,400 33,600
To Furniture and Fitting 1,000 B 3,300 53,200 53,200 53,200 By Balance bld
By Contingency Res. 2,000 4,000
To Provision for Bad and
8,250
7,800 15,600
Doubtful Debts 750 By Revaluation A/c 22,400
By Sundry Assets
8,250 30,800
8,250 By Bank A/c 17,000
53,200 53,200 53,200

CAPITAL AccOUNTS 53,200 53,.200 53200

A B C A
BANK ACcOUNT

59,800
To Balance bld
To Revaluation A/c 4,950| 3,300 - B y Balance b/d 37,000 28,000 o s apital A/c 12,000 By Balance c/d
To Balance c/d 44,050 27,700 25,000 By Cash Alc 12,000 3,000 25,00 ToC's Capital Alc 17,000
49,000 31,000 25.000 59,800
49,000 31,000 25,000 30,800
59,800
 PARTNERSHIP ACCOUNTS-ADMISSION OFA PARTNERSHIPACCOUNTS-ADMISSION OF APARTNER
PARTNER 40,000 I-V/2-23
I1-IV/2-22
BALANCE
SHEET OF
NEW FIRM
Ismal 20,000 Less: Provision for D.D.
2016 Nandy
8,000 1,260
ason 1st Apri, Assets Ashish Machinery 23,940
1,28,000 and &
Building 6,160
Liabilities
at Bank 62,000
9,000 Cash 59 800
Sundry Debtors 1,33,000
Sundry Creditors
Stock 7 26,000+ 13,600) 6400
39 60 1,33,000
Capital Alcs 53,200
Furniture Working Notes
A
53,200 (7 6,000+7 2,800) Profit Sharing Ratio
8.800 Calculation of New
53,200 Land & Building (0) 1
1,59,600
Goodwill 18,000+ 6,000) 30,00 Ashish's share 16
24,000
1,68,600 1,68600 .. Remaining share =
1- to be divided among old partners in their old proft sharing
ratioof:and
Working Note: B
Khan 92 -
36,200 53,200 22,400
Capital after all adjustments
the base Ismail 16
Cash to be brought by A & C taking 30,800
17,000
of B as the highest capital
Nandy-4- SloS
53,200 53,200 53,200 2
Ashish 16
sOLUTION OF PROBLEM 18 15: 10:5:2
REVALUATION ACCOUNT New Profit Sharing Ratiois
Calculation of Capital Required
(2)
14,000 2
To Machinery Alc 840 By Land & Buildings For share of Ashish, capital is 7 8,000.
Stock ,900
Provision for Bad Debts
Profit transferred to Capital
1,260
Total capitalofthefirm is8,000x=71,28,000
Accounts: Khan = 1,28,000x =760,000
Khan 4,500
Ismail 3,000 Ismail = 7 1,28,000 x
10 = 740,000
Nandy 1,500 5
=20,000
9,000 14,000
Nandy = 1,28,000 x
14,000 =1,28,000x =7 8,000
Ashish
CAPITAL ACCOUNTS Khan Ismail Nandy Ashish
1,28,000
Khan Ismail |NandyAshish

To Cash6 3,00o 57,000 32,000 16,000 19

sOLUTION OF PROBLEM REVALUATION
Balance cld
-

By Balance b/d 500 8,000 ACCOUNT

60,000 40,000 20,000|8,000 Cash 1,500 1,000 5,000
Revaluation A/c 4,500 3,000 1,500
Cash (1 -4,000 2,000 To Stock 1,500 By Machinery Ac
|63,000 40,000 |20,000 8,000 20,000 8,0 To Furniture 600
=
63,000 40,000 800
To Provision for Doubtful Debt
To Profit transferred to:
BALANCE SHEET OF WS KHAN, ISMAIL, NANDY & ASHISH A's Capital 1,400
Liabilities
Assets B's Capital 700 5,000

Sundry Creditors 14,800 2,100

5,000 Cash [800 + 8,000 + 4,000 +2,000) 26,100
Capital A/cs : 5,000
Stock
Khan 60,000 25,200
Debtors
 UNTS-ADMISSION OF A
PARTNER
PARTNERSHIP
A C C O U w z

PARTNERSHIP ACCOUNTS-ADMISSION
OF APARTNER
I1-IV/2-24
Revaluation A/c I1-IVI2-25
PARTNER'S CAPITAL ACCOUNTS A/c Dr.
To Seed's Capital 8,500
C A B To Stalk's Capital
A/c

on revaluation) 5,100
(Being profit 3,400
25,400 13,700
By Balance b/d 30,000 16,000 Cash A/c
To Current Alc
20,000 10,000
10,000 By General
Reserve
4,000 2,000 To Flowers Capital Alc Dr.
30,000
By Cash A/c
To Balance cid To Seed's Capital
By Goodwill Ac
By Revaluation Alc
10,000 5,000 10,000 To Stalk's Capital
A/c 20,000
1,400 700 6,000
and goodwill credited
(Being capital brougnt to old
partners 4,000
45,400 23,700 10,000 45,400 23,700 10,000 in sacrificing ratio)
Flowers Current Ac
BALANCE SHEET Dr.
ToFlowers Capital A/c 5,875
as on 1st April2014 (Being balance transterred to Capital A/c)
Assets 5,875
Liabilities
Seed's Capital A/c
Cash at Bank Dr. 525
35,500 Stalk's Capital A/c
Sundry Creditors
Goodwill
32,500 Dr.
To Seed's Current A/c 5,350
Capitals: 20,000 Bills Receivable 15,000
A
Sundry Debtors 3,000 To Stalk's Current A/c 525
10,000 16,000 (Being excess amount than required transferred to 5,350
C 10,000 Less: Provision 800
40,000 partners' Current A/cs)
Stock
15,200
Current A/cS: 15,000 Reserve Ac Dr.
25,400 Less: Fall in price 1,500 To Seed's Capital A/c 10,000
B 13,700 13,500 To Stalk's Capital A/c 6,000
39,100 Furniture 6,000 4,000
Less: Depreciation (Being the distribution of reserve)
600
5,400
Machinery 25,000 BALANCE SHEET OF MS SEED, STALK & FLOWER
Add: Appreciation 5,000 as on 30-6-2016
30,000 Liabilities Assets
1,14,600 1,14,600 Creditors( 16,000-F 500) 15,500 Cash 32,000
Working Notes
Calculation of New Profit Sharing Ratio: Capitals A/cs Stock 9,000
Seed 46,575| Debtors 8,000
A's New Ratio
=x= Stalk 31,050 Land 45,000
Flower 25,875 Fruit Trees 25,000
B's New Ratio
*412=

Current A/cs:
1,03,500 Flower's Current Alc 5,875
C's New Ratio=áx12
3 3
Seed 525
New Profit Sharing Ratio =2:1:1. Stalk 5,350
sOLUTION OF PROBLEM 5,875
20 1,24,875
1,24,875
JOURNAL Working Notes
Revaluation A/c
To Stock CAPITAL ACCOUNTS
Dr.
(Being depreciation in the value of 2,000
Seed Stalk Flower Seed Stalk Flower
Stock) 2,000
Land Alc
Fruit Trees Alc To Current A/c
Sundry Creditors A/c Dr. 5,000 525 5,350 By Balance b/d 30,000 25,000
To Revalyation Alc Dr. Balance c/d 6,000 4,000 20,000
For Dr.
5,000 46,575 31,050 25,875"Cash 6,0004,000
increase in
Creditors)
the value
of
500 By Reserve
5,100 3,400
assets and 10,500 Revaluation
decrease in Current A/c
5,875

47,100 36,400 25,875

47,100 36,400 25,875
 DARTNERSHP ACCOUNT
SADM
DMISSION OFA PARTNER
PARTNERSHIP ACCOUNTS-ADMISSION OF A
-IV/2-26 PARTNER 1-IVI2:27
Plant
(1) New Profit Sharing Ratio
Less: Depreciation 6,000
Seed
9
5 20 1,200
27,700 4,800
3 25
Stalk 4 520
riON OF PROBLEM 21(6) 27,700
Flower= or 20
JOURNAL
New Ratio=9:6:5
(2) Calculation of Total Capital: F 1,03,500
Revaluation A/c
Seed+Stalk+ Flowers =7 47,100+ 36,400+7 20,000 =
To Land and Buildings Dr. 7,500
To Furniture 6,250
Seed's Capital =
x 9 46,575 To Provision for D/D 500
Stalk's Capital = 1,03,500
20
x -731,050 (Being various assets depreciated) 750
Stock A/c Dr.
5,000
Flower's Capital = 1,03500 x5 -7 25,875 To Revaluation A/c
20 (Being appreciation in stock) 5,000
3) Amount transferred to Current Accounts X's Capital A/c Dr 1875|
Seed = 47,100- 46,575 = 525 (Cr.) Y's Capital Ac 625
To Revaluation A/c
Stalk =736,400 7 31,050 5,350 (Cr.) 2,500
Flower = 20,000 7 25,875 =F 5,875 (Dr.) (Being loss on Revaluation)
Profit and Loss A/c 10,000
SOLUTION OF PROBLEM 21(a) To X's Capital A/c 7,500
To Y's Capital Alc 2,500
REVALUATION ACCOUNT of accumulated profit)
(Being distribution
Dr. 33,125
To Plant
Cash A/c (2) 18,125
1,200 By Loss to Capital A/cs To Z's Capital A/c
o Stock A/c 11,250
400 M ,650 TO X's Capital 3,/50
To Provision for D/D 600 S 550 To Y's Capital A/c
which is
2,200 (Being Cash brought as capital and goodwill
credited to old partners Capital Acs)
2 2,200
Y ANDz
BALANCE SHEET OFX,
Assets

M
PARTNERS' CAPITAL ACCOUNTSS Liabilities
53,125
S K K
Sundry Creditors 40,000 Cash Alc
15,000
Sundry Debtors
To Goodwill
Capitals: for D/D
750
1 ,500 Provision
500 By Balance b/d 10,000 6,000 (1) 46,875 Less: 14,250
To Revaluation A/c 40,000
1,650 550 7,900 (1) 25,625
To Balance c/d
-

By Cash A/c 3,000 1,000

Stock 18,750
9,850 5,950 7,9000 (1) 18,125
90,625 Land and
Buildings (25,000-6,250) 4,500
13,000 7,000 7,900 13,000 7,0007900 90,625Lane (5.000-500) 1,30,625

1,30,625
BALANCE SHEET OF MUS M, S &K

Liabilities
as on 1st April, 2016 Working Notes: CAPITAL ACCOUNTSS
Assets
Creditors
Capital A/cs 4,000 Cash 1,900
4,000
X 30,000 20,000
M Bank To Revaluation By Balance b/d 7,500 2,500
9,850 11,250 3,750 18,125
S
5,950
Debtors 6,000 Alc 625
P/L Alc
Less: Provision 1,875 48,750 26,250 18,125
K 600 Balance cld Cash
7,900 46,875 25,625 18,125
5,400

23,700 Stock 2,000 48,750 26,250 18,125

Less: Depreciation 400
1,600
 PARTNERSHIP
ACCOUNIS-ADMISSION OF A PARTNERSHIPACCOUNTS-ADMISSION OF APARTNER
I-V/2-29
-W2-28
C a l c u l a t i o n
o fNew
Profit haring Ratio

byZ: Old Ratio

to be bought New Ratio
Calculation of Capital =
72,500.
(2) + T 25,625
and Y = 7 46,875
Total Capital of X A
=18,125.
Z's Capital- B
PROBLEM
22
sOLUTION OF JOURNAL ENTRIES
C
Dr. 8,000
Bank A/c 8,000 D
Alc
To A's Capital
by D for share of goodwill
(Being amount paid
purchased from A) sOLUTION OF
PROBLEM 233

Dr. 6,000 CAPITAL ACCOUNTSS

A's Capital Alc
6,000 A B
To Bank C
A)
(Being amountwithdrawn by Dr. 5,000
Bank A/c To Balance b/d 39,200 20,800 12,000 By Balance b/d 10,000 8,000
To D's Capital A/c
5,000 Revaluation
(Being capital brought by D) Account 9,600 6,400
Revaluation Alc
2,800 General
To Investment A/c
1,800 Reserve 9,600 6,400
1,000 Cash 12,000
To Plant ANc 10,000
investments and plant recorded)
(Being revaluation of 39,200 20,800 12,000 39,200 20,800 12,000
Dr. 1,400
A's Capital Alc Dr. 933
B's Capital Alc
C's Capital A/c Dr. 467
2,800 BALANCE SHEET OF MS A, B AND C
To Revaluation A/c
Assets
(Being loss on revaluation transferred to old partners in Liabilities
theratio of 3:2:1) 31,000
Creditors 12,000 Cash at Bank 16,000
CAPITAL ACCOUNTS
Workmen's Compensation Fund 2,000 Stock of Goods 11,000
Debtors
To Bank
To Revaluation
A 6,000 By Balance b/d 12,000 8,000 4,000
5,000
Capitals
A
B
39,200
20,800
Plant& Machinery
Land& Building
10,000
18,000

To Drawings
1,400 933 467 -By Bank 8,000 12,000

To Balance cld 6,000 6.000 3,000 3,000 By App.

Profit& Loss
7,000 7,000 3,5003.500
72,000
86,000
13,600 8.067 4,0335,500 Ac
86,000
27,000 15,000 7,500 8,500 27,000 15,000 7,500
8.500

M/s A, B,C &D Working Notes:

BALANCE SHEET (1) Calculation of C's Capital
as on 1st January, 2016 o1a1 Capital of A & B =7 39,200 + F 20,800 = 60,000
Liabilities
Assets
Creditors 16,000 C's Capital =F 60,000 x 12,000
Capital Accounts : 21,000 Cash at Bank 11.000
13,600 Debtors 13,000 2)Calculation of Sacrificing Ratio
B Stock
A
4,200

8,067
4,033 Investments 2200

5,500 Furniture 5,800

Plant & Machinery
31,200
52.200
52,200

Goodwill is credited to A's Capita.

 PARTNERSHIP ACCOUNTS-ADMISSIONOF
OFAAPARTNER ACCOUNTS-ADMISSION OFAPARTNER I-VI2-31
PARTNERSHP

Brought by T:
Calculation of Amount
-V/2-30 Total Capital required
24 5,000
P R O B L E

REVALUATIONACCOUNT
M

Net Assets
brought by C
OF Less:
s O L U T I O N

Goodwill 1,500
Plant& Machinery A/c 300 Debtors (Net) 2,160
800 By transferred to
1,700 By Loss 3,660
To Stock AC Capital Alcs: 100 taken over 500
Alc Creditors
& Fittings Less:
To
Fixtures
100 3,160
2,200 Cash brought by
C 1,840
2,500
2,500

sOLUTION OFPROBLEM 25 222S

CAPITALACCOUNTS

JOURNAL ENTRIES
S By Balance b/d 20,000 16,000 Revaluation A/c Dr. 1,200
1,100
Debts
1,840 To Provision for Bad 100
Cash Ac (1) To Fixtures & Fittings
To Revaluation
1,100 1,100 Sundry Assets (Net) 3,160 assets and reserve required
of
Alc 18,900 18,900 5,000 Cash
4,000 (Being depreciation
Balance cld maintained)
20,000 20,000 5,00 Dr. 3,120
20,000 20,000 5,000 A's Capital Alc
Dr. 2,080
B's Capital A/c 1,200
BALANCE SHEET To Revaluation A/c
4,000
(after T's admission) To P&LAc
and balance of loss distributed
Assets
(Being loss on revaluation
Liabilities
among partners) 7,200
4,000 Cash in Hand 1,840) 5,992 A's Capital Alc
Dr.
Bills Payable F 152 + 4,000+ Dr. 4,800
Sundry Creditors 4,900 |B's Capital A/c 12,000
15,500 Cash at Bank 1,883
7 15,000+ T 500) Bills Receivable To Goodwill
Capital Accounts 18,900
Sundry Debtors
|(Being goodwill written off) 4,000
18,900 (21,000+2,400) 23,400 C's Capital Alc
Dr.
2,000
5,000 Less: Provision for D/D 40
23,160 To A's Capital Alc 2,000
42,800 4,000 To B's Capital A/c in
Stock (4,800 800) credited to old partners
Plant&Machinery (7,000+300) (Being unpaid of goodwill
560 sacrificing ratio of 1:1)
Freehold Premises pr. 1,000
1,
Goodwill A's Capital Alc Dr. 1,000 2,000
2,2300 B's Capital Alc
62,300 ToCash Ac

Working Note: (Being half share of goodwill withdrawn) ) 250 (3)125

Calculation of New Profit Sharing Ratio
C's Capital A/c (3) 125
To A's Capital A/c
Total Share 1
To B's Capital A/c
on C's admission)
C's Share 5eing net effect of revaluation Dr. (5) 12,060 12,060
Cash A/c
Remaining Share =1- To C's Capital A/c
including goodwill)
4 eing the amount brought by C
AsShare CAPITAL ACCOUNTS B C
B'sShare =x-
C's Share 12,000 30,000
To Goodwill A/c By Balance b/d 12,060
A:B:C=2:2:1 To Cash ANc 7,200 4,800 By Cash Alc (4)
1,000| 1,000
 OF APARTNER
PARTNERSHIP ACCOUNTS-ADMISSION OFA ACCOUNTS-ADMISSIONo A PARTNER
PARTNE I-VI2-33
I1-VI232 CapitalA/c(2)
2,000 2,000 Share of
Premium to be brought by C
4,000
-By C's
C's Capital
Alc (3) 125 125 Add:
2,400 1,600 By
-

withdrawn -2,000
To P&LAc
720 480
4,000
To Revaluation Account 2,000
250 revaluation -

Net Income
To Capital Acs
Add: Stock 250
To Capital Acs 7,810
To Balance cid
2,805 24,245 14,125 32,125 12,060 2,250
14,125 32,125 12,060
39,050
MS A, B& C 1/5 of contributed capital 7,810
BALANCE SHEET OF
as on 1-1-2016 Add: 250 additional
fund for not showing increase in
value of stock in books 250
Assets

Liabilities
8,060
Hand
20,000 Cash in
2,000) 25,060
Sundry Creditors
T 15,000+7 12,060- 21,000 Amount to be brought by C
Capital A/cs
Sundry Debtors 8,060
2,805 Provision for Bad Capital 4,000
A 24,245 Less: 100 Add: Share of
Goodwill
B Debts
7,810 18,900 12,060
34,860
-

Stock in Trade 10,750

Furniture& Fixtures
150
54,860
54,860

Working Notes: C's share of goodwill 4,000 1s

Balance Sheet is written off. Then
(1) The goodwil shown in the Half of that amount is withdrawn by old partners.
Credited to old partners in sacrificing ratio.

(2) Calculation of Sacrificing Ratio C

A
Existing Ratio
Share on C's Admission 3

Sacrificelgain 10
10 10

(3) Adjustment of stock in trade, increase in value

Stock revalued
Less: Stock as per B/SS 12,000
10,750
1,250
A
To be credited to
To be partners in 3:2 750 500
debited to partners (5:3:2) 625 375
-250

-250
+125 +125
(4) Amount of Capital to be brought by C
in
Existing Capital of A&B 42,000
Less: P &L Dr. Balance
Loss on revaluation 4,000
1,200
5,200

36,800