1.

Assertion (A): Admission of a partner means reconstitution of the partnership whereby an old partnership ceases
to exist and a new partnership comes into existence.
Reason (R): When a partner is admitted the number of partners increases and also the profit-sharing ratio
changes. However, the firm continues. Thus, it is a reconstitution of partnership. (a)
2. Assertion (A): Atul and Bhushan are partners sharing profits equally. They admit Bharat into partnership w.e.f
1st April 2021 for 1/5th share in profits. On that date, a debit balance in the Profit and Loss Account existed at
₹50,000. It will be written off to the capital accounts of Atul and Bhushan equally.
Reason (R): Debit balance in Profit and Loss Account is a fictitious asset and all fictitious assets are written off
at the time of reconstitution of the firm to the capital accounts of old partners in the old profit sharing ratio.
(a)
3. L and M are partners sharing profits in ratio of 3 : 2 respectively. N was admitted for 1/5th share of profit.
Machinery would be appreciated by 10% (Book value ` 80,000) and Building would be depreciated by 20% (`
2,00,000). Unrecorded debtors of ` 1250 would be brought into books new and a creditor amounting to ` 2750
died and need not pay anything on this account. What will be profit/loss on revaluation?
(a) Loss ` 28,000 (b) Profit ` 28,000 (c) Loss ` 40,000 (d) Profit ` 40,000
4. X, Y and Z are partners sharing profit in the ratio of 3 : 2 : 1. They agree to admit M into the firm. X, Y and Z
agreed to give 1/3rd, 1/6th, 1/9th share of their profit. The share of profit of M will be–
(a) 11/54 (b) 12/54 (c) 13/54 (d) 14/54
5. Mohan and Mahesh are partners in a firm sharing profits and losses in the ratio of 3 : 2. Nusrat is admitted as
partner with 1/4 share in profit. Nusrat takes his share from Mohan and Mahesh in the ratio of 2 : 1. Calculate
new profit-sharing ratio.
6. P and Q were partners in a firm sharing profits in the ratio of 5:3. R was admitted for 1/4th share in the profits, of
which he took 75% from P and the remaining from Q. Calculate the sacrificing ratio of P and Q.
Two markers
7. A and B are in partnership sharing profits and losses in the ratio of 5 : 3. C is admitted as a partner who
pays ` 40,000 as capital and the necessary amount of goodwill which is valued at ` 60,000 for the firm. His
share of profits will be 1/5th which he takes 1/10th from A and 1/10th from B.
Pass Journal entries and also calculate future profit-sharing ratio of the partners.
8. Ram and Mohan are partners in a firm sharing profits in the ratio of 3 : 2. On 1st April, 2023, they admit Sohan as
a partner for 1/4th share in the profits. Sohan contributed following assets towards his capital and for his share of
goodwill:
Stock ` 60,000; Debtors ` 80,000; Land ` 1,00,000, Plant and Machinery ` 40,000.
On the date of admission of Sohan, the goodwill of the firm was valued at ` 6,00,000.
Pass necessary Journal entries in the books of the firm on Sohan's admission.
Three markers
9. At the time of admission of a partner Suresh, assets and liabilities of Ramesh and Naresh were revalued as
follows:
(a) A Provision for Doubtful Debts @10% was made on Sundry Debtors (Sundry debtors ` 50,000).
(b) Creditors were written back by `5,000.
(c) Building was appreciated by 20% (Book Value of Building `2,00,000).
(d) Unrecorded Investments were valued at `15,000.
(e) A Provision of `2,000 was made for an Outstanding Bill for repairs.
(f) Unrecorded Liability towards suppliers was `3,000.
Pass necessary Journal entries.
10. Shreya and Rajni are business partners in the firm sharing profit and loss in the ratio of 6:4 having ₹1,59,000 and
₹1,60,000 as their respective capitals. Sarita is admitted as the new partner in the firm on 1st September 2022,
and it was decided that the new profit sharing ratio between Shreya, Rajni, and Sarita will be 8:6:4, respectively.
Sarita has to bring ₹95,000 as her share of capital. Pass necessary journal entries.
Four Markers
11. 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 ` Assets `

Creditors 30,000 Cash at Bank 20,000

Investment Fluctuation Fund 12,000 Debtors 85,000
General Reserve 25,000 Less: Provision for Bad 5,000 80,000
Capitals A/cs: Debts

Stock 1,30,000
Investments 60,000
A 1,60,000 Furniture 77,000
B 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 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.
12. Vimal and Nirmal are partners in a firm sharing profits and losses in the ratio of 3: 2. A new partner Kailash is
admitted. Vimal gives 1/5th of his share and Nirmal gives 2/5th of his share in favour of Kailash. For the purpose
of Kailash's admission, goodwill of the firm is valued at 75,000 and Kailash brings his share of goodwill in cash
which is retained in the business. Journalise the above transactions.
Six Markers
13. Leena and Rohit are partners in a firm sharing profits in the ratio of 3: 2. On 31st March, 2018, their Balance
Sheet was as follows:
BALANCE SHEET OF LEENA AND ROHIT as at 31st March, 2018

Liabilities ` Assets `

Sundry Creditors 80,000 Cash 42,000

Bills Payable 38,000
General Reserve 50,000 Debtors 1,32,000
Capitals: Less: Provision for Doubtful 2,000 1,30,000
Debts

Stock 1,46,000
Plant and Machinery 1,50,000
Leena 1,60,000
Rohit 1,40,000 3,00,000

4,68,000 4,68,000

On the above date Manoj was admitted as a new partner for 1/5th share in the profits of the firm on the following terms:
(i) Manoj brought proportionate capital. He also brought his share of goodwill premium of ` 80,000 in cash.
(ii) 10% of the general reserve was to be transferred to provision for doubtful debts.
(iii) Claim on account of workmen's compensation amounted to `40,000.
(iv) Stock was overvalued by `16,000.
(v)Leena, Rohit and Manoj will share future profits in the ratio of 5:3:2.
Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet of the reconstituted firm.