1. Navya and Radhey were partners sharing profits and losses in the ratio of 3: 1.
Shreya was
admitted for 1/5th share in the profits. Shreya was unable to bring her share of goodwill
premium in cash. The journal entry recorded for goodwill premium is given below:
Shreya’s Current A/c. Dr. 24,000
To Navya’s Capital A/c. 8,000
To Radhey’s Capital A/c 16,000
(Being entry for goodwill treatment passed)
The new profit-sharing ratio of Navya, Radhey and Shreya will be:
a) 41: 7: 12
b) 13:12: 10
c) 3:1: 1
d) 5:3: 2
2. Ganga and Jamuna are partners sharing profits in the ratio of 2:1. They admit Saraswati for 1/5th
share in future profits. On the date of admission, Ganga’s capital was ₹ 1,02,000 and Jamuna’s
capital was ₹ 73,000. Saraswati brings ₹ 25,000 as her share of goodwill and she agrees to
contribute proportionate capital of the new firm. How much capital will be brought by
Saraswati?
a) ₹ 43,750
b) ₹ 37,500
c) ₹ 50,000
d) ₹ 40,000
3. X and Y were partners in the profit-sharing ratio of 3: 2. Their balance sheet as at March 31, 2022
was as follows:
Balance Sheet
As at 31st March 2022
Liabilities (₹) Assets (₹)
Creditors 56,000 Plant and Machinery 70,000
General Reserve 14,000 Buildings 98,000
Capital Accounts: Stock 21,000
X :- 1,19,000 Debtors:- 42,000
Y :- 1,12,000 2,31,000 (-)Provision 7,000 35,000
Cash in Hand 77,000
3,01,000 3,01,000
Z was admitted for 1/6th share on the following terms:
(i) Z will bring ₹56,000 as his share of capital, but was not able to bring any amount to compensate
the sacrificing partners.
(ii) Goodwill of the firm is valued at ₹84,000.
(iii)Plant and Machinery were found to be undervalued by ₹ 14,000 Building was to brought up to
₹1,09,000.
(iv)All debtors are good.
(v) Capitals of X and Y will be adjusted on the basis of Z’s share and adjustments will be done by
opening necessary current accounts.
You are required to prepare revaluation account and partners’ capital account.
4. A and B are partners in a firm. They admit C as a partner with 1/5th share in the profits of the
firm. C brings 1,50,000 as his share of capital. The value of the total assets of the firm is
₹5,50,000 and outside liabilities are valued at 70,000 on that date. C's share of hidden goodwill
will be:
(A) 2,70,000 (B) 54,000
(C) 1,20,000 (D) 24,000
5. A, B and C were partners in a firm sharing profits in the ratio of 3:2:1. D was admitted into the
firm with 1/4th share in profits, which he got 3/16th from A and 1/16th from B.
The total capital of the firm as agreed upon was 1,20,000 and D brought in cash equivalent to 1/4th
of this amount as his capital. The capital of other partners also had to be adjusted in the ratio of
their respective share in profits by bringing in or paying cash. The capitals of A, B and C after all
adjustments related to revaluation of assets and reassessment of liabilities were 40,000; 35,000 and
30,000 respectively.
Calculate the new capitals of A, B and C and record the necessary journal entries for the above
transactions.
6. A and B share the profits of a business in the ratio of 2: 1. They admit C into the firm for a 1/5th
share in the profits which he acquires from A and B in the ratio of 3:2. On the date of admission
of C, the Balance Sheet of the firm was as follows:
Liabilities ₹ Assets ₹
Creditors 3,00,000 Machinery 6,20,000
A's Capital 7,00,000 Land and Building 5,00,000
B's Capital 5,00,000 Stock 2,00,000
Debtors 1,60,000
Bank 20,000
15,00,000 15,00,000
From the information given below, complete Revaluation Account, Partners' Capital Accounts and
the new Balance Sheet of A, B and C.
REVALUATION ACCOUNT
Particulars ₹ Particulars ₹
To Stock A/c ------ By Land & Building A/c ------
To Profit transferred to Capital A/c s:
A ------
B ------ ------
2,00,000 ------
CAPITAL ACCOUNTS
Particulars A B C Particulars A B C
₹ ₹ ₹ ₹ ₹ ₹
To Bal. c/d ------ ------ ------ By ------ ------ ------
By Revaluation A/c 1,00,000 ------
By Bank A/c ------
By Premium for
Goodwill A/c 60,000 ------
------ ------ ------ ------ ------ 3,00,000
BALANCE SHEET (After Admission)
Liabilities ₹ Assets ₹
Creditors 3,00,000 Bank ------
Capitals: 7,00,000 Debtors
A ------ 5,00,000 Stock
B ------ Land and Building
C ------ Machinery
7. Karan and Vijay are partners in a firm sharing profits and losses in the ratio of 4:3. They admit
Shrey for 1/3 share in the profits.
On the date of Shrey's admission:
(a) The capitals of Karan and Vijay are: 40,000 and 30,000 respectively.
(b) Profit and Loss Account has a debit balance of ₹7,000.
(c) General Reserve shows a balance of 21,000 which is not to be disturbed.
(d) Goodwill of the firm is valued at ₹42,000.
(e) The cash at bank is 15,000.
(f) Shrey brings in proportionate capital and his share of goodwill in cash.
You are required to prepare:
(i) Partner's Capital Accounts.
(ii) Cash at Bank Account of the reconstituted firm on the date of Shrey's admission.
8. A, B and C were partners sharing profits in the ratio of 3:4: 5. B retires from the firm and his
capital balance after all adjustments regarding Reserves and Revaluation was 1,20,000. It was
agreed between A and C to pay ₹1,50,000 to B in final settlement. On the same date D was
admitted for 1/5th share. Ascertain the amount of goodwill premium brought in by D will be:
(A) 30,000 (B) 90,000
(C) 6,000 (D) 18,000
9. Divya and Isha are partners in a firm sharing profits and losses in the ratio of 2: 3. Leela was
admitted as a new partner for 1/5th share in the profits of the firm. Leela acquires her share
from Divya and Isha in the ratio of 1: 2. The new profit sharing ratio will be:
(A) 4:8:3 (B) 8:4:3
(C) 7:5:3 (D) 5:7:3
10. A and B were partners in a firm sharing profits in the ratio of 4: 1. On 1-3-2021, they admitted C
as a new partner for 1/3rd share in the profits of the firm. They fixed the new profit sharing ratio
as 4:2:3.
The P & L A/c on the date of admission showed a Balance of ₹32,000 (Dr.). The firm also had a
reserve of ₹1,00,000. C is to bring ₹60,000 as premium for his share of goodwill. Showing your
calculations clearly, pass necessary journal entries to record the above transactions.
11. A and B are partners sharing profits in the ratio of 3: 2. They admitted C as a new partner for
1/3rd share in profit of the firm. C acquires his share as 2/9 from 4 and 1/3rd of his share from B.
At the time of C's admission:
(i) The firm's goodwill was valued at ₹1,80,000.
(ii) General Reserve appearing in the books was ₹75,000.
(iii) Loss on revaluation of assets and liabilities was ₹40,000.
Before any adjustment was made, the capital of A and B were ₹1,60,000 and ₹80,000 respectively
and it was decided that C will bring in capital proportionate to his share of profit after all
adjustments.
You are required to pass necessary journal entries on C's admission.
12. A, B, C and D are partners sharing profits in the ratio of 4:3:2:1. They admit E as a new partner
for1/10th share. It is agreed that C and D will retain their original shares. What will be New profit
sharing ratio?
(A) 4:3:2:1:1 (B) 24:18:14:7:7
(C) 7:5:4:2:2 (D) 36:27:18:9:10
13. Arun, Barun and Chug are partners sharing profits in 3:2:2. They admitted Mallika into
partnership for 1/5th share which she acquired from Arun, Barun and Chug in 2: 2:1 ratio
respectively. You are required to calculate the new profit sharing ratio.
14. Chander and Mohini are partners sharing profits in the ratio of 3:2. Their Balance Sheet as at
31st March, 2021 is given below:
Liabilities ₹ Assets ₹
Chander's Capital 11,40,000 Land & Building 5,60,000
Mohini's Capital 7,00,000 Plant & Machinery 6,00,000
Workmen's Compensation Reserve 60,000 Stock 1,60,000
Creditors 1,00,000 Sundry Debtors 6,00,000
Less: Provision 20,000 5,80,000
Bank 1,00,000
20,00,000 20,00,000
They decide to admit Shikha as a new partner from 1st April, 2021. Their new profit sharing ratio was
3:2: 5. Shikha brought in ₹6,00,000 as her capital and her share of goodwill premium in cash.
(a) Shikha's share of goodwill premium was valued at ₹30,000.
(b) Plant and Machinery was found undervalued by 20%.
(c) Creditors were unrecorded to the extent of ₹20,000.
(d) Claim on account of workmen compensation was ₹40,000.
(e) Bad debts amounted to ₹30,000.
Prepare Revaluation A/c and Partner's Capital Accounts.
15. A and B are partners sharing profits in the ratio of 3: 2. C is admitted into partnership. A
sacrifices 1/3rd of his share and B sacrifices 1/10th from his share in favour of C. New profit
sharing ratio will be:
(A) 10:9:6 (B) 4:3:3
(C) 8:9:13 (D) 3:3:4
16. A, B and C were partners sharing profits in the ratio of 4:3: 2. D was admitted in the firm for
1/6th share in profits and on the same date A retires from the firm. The Goodwill ₹2,70,000 was
appearing in the firm's books on this date. Pass necessary journal entry to record goodwill.
17. Neha and Tara are partners in a firm sharing profits and losses in the ratio of 3: 2. Their Balance
Sheet as at 31st March, 2022, stood as follows:
Liabilities ₹ Assets ₹
Capital Accounts : Plant & Machinery 1,20,000
Neha 80,000 Land and Building 1,40,000
Tara 1,00,000 1,80,000 Debtors 1,90,000
General Reserve 1,20,000 Less: Provision for DD (40,000) 1,50,000
Workmen's Compensation Fund 50,000 Stock 60,000
Creditors 1,50,000 Cash 30,000
5,00,000 5,00,000
They agreed to admit prachi into partnership for 1/5th share of profits on 1st April, 2022, on the
following terms:
(a) All debtors to be considered as good and therefore the provision for doubtful debts to be written
back.
(b) Value of land and building to be increased to ₹1,80,000.
(c) Value of plant and machinery to be reduced by ₹20,000.
(d) The liability against Workmen's Compensation Fund is determined at ₹20,000 which is to be paid
later in the year.
(e) Prachi to bring in her share of Goodwill of ₹1,00,000 in cash.
(f) She will further bring in cash so as to make her capital equal to 20% of the total capital of the new
firm: (Show your workings clearly).
You are required to prepare:
(i) Revaluation Account.
(ii) Partners' Capital Accounts.
18. Vasudha and Veena were in partnership sharing profits and losses in the ratio of 3:1. They
admitted Tilak as a new partner. Tilak brought ₹1,20,000 as his share of goodwill premium,
which was credited to Vasudha and Veena's capital accounts in the ratio of 2: 1. On the date of
admission, goodwill of the firm was valued at ₹4,80,000. New profit sharing ratio will be:
(A) 7:2:3 (C) 9:3:4
(B) 8:1:3 (D) 5:1:2
19. X and Y entered into partnership on 1.4.2021. On 1.1.2022 they admitted Z as a new partner for
1/6th share in the profits which he acquired equally from X and Y. The new profit sharing ratio of
X, Y and Z was 3:2: 1. Calculate the profit sharing ratio of X and Y at the time of forming the
partnership.
(A) 5:3 (B) 3:5
(C) 5:7 (D) 7:5
20. A, B and C are partners sharing profits in the ratio of 8: 7: 5. D is admitted as a new partner for
1/4th share. B sacrifices 1/10th from his share in favour of D and the remaining sacrifice was
made by A and C in the ratio of 2: 1. Calculate sacrificing ratio and new profit sharing ratio.
21. Preeti and Niti are partners in a firm sharing profits in the ratio of 2: 3. On April 1, 2022 they
admit Shruti as a new partner and the profit sharing ratio of Preeti, Niti and Shruti is agreed to
be 3:3:2. Shruti contributed the following assets towards her capital and for Wood her share of
goodwill: Stock ₹70,000; Debtors ₹1,40,000; Vehicle ₹3,00,000 and Computers ₹1,20,000. On the
date of admission of Shruti, the goodwill of the firm was valued at ₹6,40,000. Record necessary
journal entries in the books of the firm on Shruti's admission.
22. Amit and Barun are partners sharing profits in the ratio of 4: 1. Their Balance Sheet as a 31st
March, 2022, was as under:
Liabilities ₹ Assets ₹
Sundry Creditors 51,000 Furniture 4,000
Capital Accounts Building 45,000
Amit 20,000 Goodwill 1,000
Barun 15,000 35,000 Debtors 9,400
Less: Provision for
doubtful debts 400 9,000
Cash 27,000
86,000 86,000
On 1st April, 2022, Charan is admitted as a new partner on the following terms:
(i) The new profit-sharing ratio of the partners to be 2:1:1.
(ii) Charan to bring in ₹16,000 as his capital but would be unable to bring his share of goodwill in
cash.
(iii) The value of the goodwill of the firm to be calculated on the basis of Charan's share in the profits
and the capital contributed by him.
(iv) Furniture, which had been undervalued by ₹600 to be brought up to its revised value.
(v) Out of the total insurance premium paid, ₹3,400 to be treated as prepaid insurance. The amount
was earlier debited to Profit & Loss Account.
You are required to prepare:
(i) Revaluation Account.
(ii) Partners' Capital Accounts.
23. A and B were partners with capitals of 6,00,000 and 74,00,000 respectively. C was admitted for
1/5th share in profits. The journal entry recorded for premium for goodwill brought in by C is
given below:
Date Particulars LF Dr. Cr
Premium for Goodwill A/c 2,00,000
To A's Capital A/c 1,20,000
To B's Capital A/c 80,000
(Adjustment for premium for goodwill
brought in by C)
The new profit sharing ratio will be:
(A) 21:19:10 (C) 12:8:5
(B) 19:21:10 (D) 13:7:5
24. P, Q and R share profits in the ratio of 5: 3:2. S was admitted into partnership. S brings in
₹30,000 as his capital. S is entitled for 1/5th share in profits which he acquires equally from P, Q
and R. Goodwill of the firm is to be valued at three years' purchase of last four years' average
profits. The profits of the last four years' are ₹32,000, ₹38,000, ₹35,000 and ₹31,000
respectively. S cannot bring goodwill in cash. Goodwill already appears in the books at ₹50,000.
Give Journal entries.
25. Given below is the Balance Sheet of A and B, who are carrying on partnership business as at
March 31, 2022. A and B share profits and losses in the ratio of 3:2.
Liabilities ₹ Assets ₹
Bills Payable 6,000 Cash 28,750
Creditors 30,000 Sundry Debtors 80,000
Outstanding Expenses 14,000 Stock 30,000
Capital A/cs: Plant 1,00,000
A 2,00,000 Buildings 1,50,000
B 1,50,000 3,50,000 Goodwill 11,250
4,00,000 4,00,000
On that date, they agree to admit C as a partner on the following terms:
(a) C will get 1/4th share in profits.
(b) New profit sharing ratio shall be 3:3:2.
(c) Goodwill shall be valued on 2 ½ years' purchase of the past four years' average profits, which
were ₹17,000; ₹14,000; ₹15,000 and ₹20,000 respectively.
(d) C will introduce ₹40,000 as capital.
(e) Plant is to be appreciated to ₹1,20,000 and the value of buildings is to be appreciated by ₹20,000.
(f) Stock is found overvalued by ₹5,000.
(g) Creditors were unrecorded to the extent of ₹1,000.
Prepare partner's capital accounts.
26. Joy and Deb were partners sharing profits & losses in the ratio of 2: 1. They admitted Gopi into
partnership for 1/5 share. At the time of Gopi's admission, Furniture (book value 02,50,000) was
reduced by 40% and Machinery (book value 1,50,000) was reduced to 40%.
What was the net decrease in value of assets?
27. A and B are partners in a firm having capital balances of 90,000 and 60,000 respectively. General
Reserve appeared in their books at 50,000 and advertisement suspense at ₹20,000. They admit C
for 1/3rd share and C is to bring proportionate amount of capital. The capital amount of C will
be:
(A) 60,000 (C) 90,000
(B) 75,000 (D) 1,00,000
28. A and B are partners sharing profits in 5: 3. C is admitted into the firm. A surrenders
1/32 from his share and B surrenders 1/24th of his share in favour of C. Sacrificing ratio will be………..
29. Ritesh and Somesh are partners in a firm sharing profits and losses equally. They admit Satvik on
1st April, 2021 for 1/5 share in the profits of the firm, future profit-sharing ratio between Ritesh
and Somesh would be 3:2.
At the time of reconstitution of a partnership firm, goodwill was valued at two years" purchase of
the average profits of the preceding four years which were as follows:
Year Profit/Loss
2017-18 Profit 70,000 (after debiting loss of stock by fire 15,000)
2018-19 Profit 50,000 (including insurance claim of ₹5,000)
2019-20 Loss 40,000 (after debiting voluntary retirement compensation paid 20,000)
2020-21 Profit 60,000 (excluding insurance premium of 10,000 on insurance of assets)
(a) The average profits of the firm from the year 2017-18 to the year 2020-21 were:
(i) 30,000
(iii) 37,500
(ii) 60,000
(iv) 40,000
(b) The value of goodwill of the firm on Satvik's admission was :
(i) 60,000
(iii) 75,000
(ii) 80,000
(iv) 1,20,000
(c) Satvik is unable to bring in cash his share of goodwill. The account to be debited record his
goodwill compensation will be:
(i) Satvik's Capital A/c
(iii) Premium for Goodwill A/c
(ii) Satvik's Current A/c
(iv) Old Partners' Capital A/c
(d) New profit sharing ratio of the partners will be:
(i)3:2:1
(iii) 12:8:5
(ii) 1:1:1
(iv) 9:6:5
30. A and B are partners in a firm sharing profits and losses in the ratio of 3:2. On 31st March 2022,
their Balance Sheet was as under :
Liabilities ₹ Assets ₹
Creditors 1,20,000 Bank 30,000
Outstanding Expenses 30,000 Investments 1,50,000
General Reserve 1,50,000 Debtors 1,25,000
Capital Accounts: Stock 1,50,000
A 6,00,000 Premises 8,00,000
B 4,00,000 10,00,000 Advertisement Suspense 45,000
13,00,000 13,00,000
On the above date C is admitted as a partner for 3/7th share which he takes 2/7th from A and 1/7th
from B. He brings 2,00,000 as premium out of his share of 2,40,000. C brings 76,00,000 as his capital.
Following terms are agreed upon:
(i) Premises be depreciated by 10%.
(ii) Accrued income ₹15,000 is to be taken into account.
(ii) Investments are to be increased by 2,00,000 and stock is to be increased to 2,00,000.
(iv) A liability of 10,000 included in creditors is not likely to arise.
(v) There is an unrecorded asset worth 50,000.
Prepare Revaluation A/c and partner's Capital A/cs. Also calculate the new profit sharing ratios.
31. Swati and Aman were partners in a firm. Their fixed capitals were 9,00,000 and 3,00,000,
respectively. They shared profits in the ratio of their capitals. Divya was Cadmitted as a new
partner for 1/3rd share in the profits of the firm. Divya brought her share of goodwill premium in
cash out of which 45,000 were credited to the current account of Swati. The amount of goodwill
premium brought in by Divya was :
(A) 1,80,000
(C) 60,000
(B) 1,35,000
(D) 45,000
32. A, B and C are partners sharing profits in 9: 6: 5. D is admitted into partnership. A sacrifices 1/3rd
of his share, B sacrifices 1/20th from his share and C sacrifices 1/5th of his bshare in favour of D.
New profit sharing ratio will be:
(A) 7:15:12:26
(C) 6:5:1:8
(B) 5:6:4:5
(D) 6:5:4:5
33. A, B and C were partners in a firm sharing profits in the ratio of 2:2: 1. They admitted D for 1/6th
share in the profits. The new profit sharing ratio will be 13:8:4:5 respectively. D brought 5,00,000
for his capital and 60,000 for his share of goodwill. Pass necessary entries.
34. A and B were partners in a firm. They shared profits in the ratio of 2: 3. On 1st April, 2022, they
admitted C as a new partner and the new profit sharing ratio will be 3:3:4. C brings 20,00,000 as
his capital.
On this date, their Balance Sheet appeared as follows:
Liabilities ₹ Assets ₹
Creditors 4,00,000 Fixed Assets 20,00,000
General Reserve 3,00,000 Stock 15,00,000
Capital Accounts: Debtors 5,00,000
A 15,00,000 Cash Balance 2,00,000
B 20,00,000 35,00,000
42,00,000 42,00,000
Following revaluations were made:
(i) There was a liability for workmen compensation amounting to 50,000.
(ii) 20,000 of debtors are bad and a provision of 5% was to be created for doubtful debts.
(iii) Expenses debited to the Profit & Loss Account includes a sum of 14,000 paid for A's personal
expenses.
(iv) Stock includes 40,000 for obsolete items.
(v) Fixed assets are to be revalued at 18,00,000.
Goodwill of the firm is valued at 4,00,000 and C brings his share of goodwill in cash. Prepare
Revaluation Account & Partner's Capital Accounts.
35. A and B are partners sharing profits and losses in 3:2. They admit C for 1/5 th share. In future the
ratio between A and B would be 2: 1. New profit sharing ratio will be:
(A) 12:8:5
(C) 8:4:3
(B) 8:12:5
(D) 4: 8:3
36. A and B are partners sharing profits in the ratio of 3: 1. Their Balance Sheet as at 31-3-2022 was
as follows:
Liabilities ₹ Assets ₹
Capitals: 90,000 Bank 10,000
A 30,000 Debtors 60,000
B 20,000 Stock 40,000
Creditors 20,000 Investments 50,000
Workmen's Compensation Fund
1,60,000 1,60,000
C is admitted for 2/5 share in future profits. For this purpose following adjustments are agreed upon:
C will bring 80,000 for Capital and 20,000 for Goodwill.
Market value of investments is 45,000; claim on account of workmen's compensation is 12,000.
Pass necessary journal entries.
