CHAPTER:4

ADMISSION OF A PARTNER

1. At the time of admission of a partner, undistributed profit appearing in the balance sheet of
the old firm should be transferred to capital accounts of
(a) old partners in the old profit sharing ratio (b) old partners in the new profit sharing ratio
(c) all the partners in the new profit sharing ratio (d) none of the above.
2.C is admitted in a firm for 1/4 share in profits for which he brings ₹3,000 for
goodwill. It will be taken away by old partners in
(a) old profit sharing ratio (b) new profit sharing ratio (c) sacrificing ratio (d) gaining ratio
3.A and B who are partners sharing profits in the ratio of 3: 1 and admit C to one-fourth share
in the future profits, the profit sharing ratio will be
(a) A 9/16; B 3/16; C 4/16 (b) A 10/16 ; B 2/16; C 4/16
(c) A 8/16; B 4/16; C 4/16 (d) A 6/16 ; B 6/16 ; C 4/16.
4.A and B share profits in the ratio of 4/5 and 1/5, admit C to 1/2 share, the
profit sharing ratio of the new firm would be
(a) A 2/10; B 3/10 ; C 5/10 (b) A 3/10; B 2/10 ; C 5/10
(c) A 4/10; B 1/10 ; C 5/10 (d) A 1/10; B 4/10 ; C 5/10
5.A and B are partners in the ratio of 2: 1. They admit C for 1/4 share wh ontributes ? 3,000
for his share of goodwill. The total value of the goodwill the firm is
(a ₹3,000 (b) ₹12,000 (c) ₹9,000 (d) ₹15,000
6.Prithvi and Akash are equal partners. They decide to admit Neel for 1/3rd share.
Calculate Neel's share of Capital, if the capital accounts of Prithvi and Akash (after passing
all adjustment entries) shows a credit balance of ₹50,000 and ₹40,000 respectively.
(a)₹45,000 (b) ₹60,000 (c) ₹50,000 (d) ₹90,000
7.Read the following statements: Assertion (A) and Reason (R). Choose one of the correct
alternatives given below:
Assertion (A): Anahat and Parminder are partners sharing profits in the ratio of 2:1. They
admit Rubayat as partner w.e.f. 1st January 2021. On that date, Goodwill existed in the books
at 1,00,000. Goodwill of 50,000 was written off by debiting capital accounts of Anahat and
Parminder in the ratio of 2:1. While balance goodwill was carried forward in the Balance
Sheet.
Reason (R): Goodwill existing in the books is purchased goodwill and therefore, is not
written off.
a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of
Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A).
c) Assertion (A) is true but Reason (R) is False
d) Both Assertion (A) and Reason (R) are False.
8.Assertion (A): Dev and Anil are partners sharing profits in the ratio of 3:2. They admit
Ramesh into a partnership for 1/4th share on 1st April 2020. On that date, Deferred Revenue
Expenditure existed in the books at 1,00,000. They carried it in the books of the firm because
the expenditure will give benefit for the next five years.
Reason (R): Deferred Revenue Expenditure is written off on the reconstitution of the firm and
is not carried forward.
Alternatives:
a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of
Assertion (A).

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 CHAPTER:4
ADMISSION OF A PARTNER

b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A).
c) Assertion (A) is true but Reason (R) is False
d) Both Assertion (A) and Reason (R) are False
TRUE/FALSE
9.At the time of admission of a partner, general reserve is transferred to revaluation account.
10. Undistributed profits, general reserve, etc, are transferred to partners' current accounts, if
capital accounts are fixed.
FILL UPS
11.Gaining partner or partners-------- the sacrificing partner or partners for the sacrifice in
share of profit.
12. At the time of admission of a partner, general reserve is transferred to capital accounts of
partners in their-------.
13. Asin and Shreyas are partners in a firm. They admit Ajay as a new partner with 1/5 th
share in the profits of the firm. Ajay brings 5,00,000 as his share of capital. The value of the
total assets of the firm was 15,00,000 and outside liabilities were valued at 5,00,000 on that
date. Give the necessary Journal entry to record goodwill at the time of Ajay's admission.
Also show your workings.
14. Madhuri and Arsh were partners in a firm sharing profit and losses in the ratio of 3:1.
Their Balance Sheet of Madhuri and Arsh Balance Sheet as at 3lst March, 2019 was as
follows:
Liabilities ₹ Assets ₹
Capitals: Plant & Machinery 4,70,000
Madhuri 3,00,000 Investments 1,10,000
Arsh. 2,00,000 Debtors1,20,000
5,00,000 Less: 10,000
Workmen’s Stock 1,10,000
compensation fund 60,000 Cash 30,000
Creditors 1,90,000
Employees’
provident fund 1,10,000
8,60,000 8,60,000

On Ist April, 2019, they admitted Jyoti into partnership for 1/4th share in the profits of the
firm. Jyoti brought proportionate capital and 40,000 as her share of goodwill premium.
The following terms were agreed upon:
i) Provision for doubtful debts was to be maintained at 10% on debtors.
(ii) Stock was undervalued by 10,000.
(iii) An old customer whose account was written off as bad, paid 15,000.
(iv) 20% of the investments were taken over by Arsh at book value.
(v) Claim on account of workmen's compensation amounted to 70,000.
(vi) Creditors included a sum of ?27,000 which was not likely to be claimed.
Prepare Revaluation Account, Partners' Capital Accounts, and the Balance Sheet of the
reconstituted firm.

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 CHAPTER:4
ADMISSION OF A PARTNER

15. Karan and Varun were partners in a firm sharing profits and losses in the ratio of 1: 2.
Their fixed capitals were 2,00,000 and 3,00,000 respectively. On 1st April 2016, Kishore was
admitted as a new partner for 1/4th share in the profits. Kishore brought 2,00,000 for his
capital which was to be kept fixed like the capitals of Karan and Varun. Kishore acquired his
share of profit from Varun.
Calculate goodwill of the firm on Kishore's admission and the new profit sharing ratio of
Karan, Varun and Kishore. Also, pass necessary Journal Entry for the treatment of Goodwill
on Kishore's admission considering that Kishore did not bring his share of goodwill premium
in cash.

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