Admission of Partner

1.  The balance sheet of Shrihas and Madan as on 31st March, 2012 is set out below, they share profits and losses in the ratio of 2:1.
Balance sheet as on 31st March, 2012
Liabilities
Amount
Assets
Amount
Shrihas's Capital
40000
Building
20000
Madan's capital
30000
Furniture
6000
General Reserve
24000
Stock
12000
Creditors
16000
Debtors
60000


Cash
6000


Profit & Loss A/c
6000





110000

110000

On 1st April, 2012, they agreed to admit Prasanna as a partner into the firm on the following terms:
1. Prasanna to bring Rs. 12,000 as capital and Rs. 9,000 as a Goodwill which is to ratained in the business. He will be entitled to 1/4th share of profits of the firm.
2. 50% of General Reserve is to remain as Reserve for Doubtful Debts.
3. Furniture is to be depreciated by 5%.
4. Stock is to be revalued Rs. 13,000.
5. Creditors of Rs. 1000 are not likely to claim and hence should be written off.
6. Rent of Rs. 400 due not received has not been recorded in the books.
Prepare Profit and Loss Adjustment A/c, Partner's Capital A/c and Balance sheet of the firm after admission of Prasanna.
Ans.

Profit and loss adjustment a/c
Profit: 2100
Balance sheet total
Rs. 114100
Cash A/c Balance
27000
Capital A/c

Shrihas
51400
Madan
35700
Prasanna



2. Nandkishor and Nandlal are in partnership sharing profits and losses in the proportion of ¾ and ¼ respectively. Their Balance Sheet as on 31st March, 2014 was as under.

Balance Sheet as on 31st March, 2014

Liabilities
Rs.
Assets
Rs.
Nandkishor Capital
30000
Land and Building
25000
Nandlal Capital
16000
Furniture
2000
General Reserve
4000
Stock
20000
Sundry Creditors
40000
Sundry Debtors
20000


Bills Receivable
13000


Bank Balance
10000

90000

90000

On 1st April, 2014, they decided to admit Nandram on the following terms.
1. He should be given 1/5th share in profit and for that he should bring in Rs. 20,000 as capital.
2. Goodwill should be raised at Rs. 20,000.
3. Depreciate Furniture and stock by 10% and Create 5% R.D.d. on Debtors
4. Appreciate Land and Building by 20%.
5. The Capitals of all partners should be adjusted in their profit sharing proportion.
Pass the necessary journal entries in the books of the partnership firm and prepare a Balance Sheet of the new firm.

Ans.

Profit and loss adjustment a/c
Profit: 1800
Balance sheet total
140000
Bank Balance
38200
Capital A/c

Nandkishor
60000
Nandlal
20000
Nandram
20000
New Profit Sharing Ratio
3:1:1


3. Ranade and Kanade were partners and shared the profits in the ratio of 3/5 th and 2/5th. On 31st March, 2014 their Balance Sheet was as follows.


Balance Sheet as on 31st March, 2014

Liabilities
Rs.
Assets

Rs.
Sundry Creditors
15000
Bank

250
Reserve Fund
5000
Sundry Debtors
22500

Capital Accounts

Less: RDD
250
22250
Ranade
36000
Stock

8500
Kanade
24000
Investments

12000


Plant

15000


Building

22000

80000


80000

On 1st April 2014, Mr. Hegade was admitted to partnership on the following terms.

1. He should bring Rs. 18650 as his capital for his 1/5 share.
2. Valuation of the goodwill of the firm was to be made at twice the average profit of the last three years. The profits were as follows.
2011 – 12 = Rs. 16000
2010 – 11 = Rs. 27000 and
2009 – 10 = Rs. 24500
Hegade is to bring the goodwill in cash equal to his share.
3. Before admitting Hedage, R.D.D. was to be raised upto Rs. 500 only.
4. Closing stock was to be valued at Rs. 7,500.
5. Appreciate Building by 5%.
Prepare Profit and Loss Adjustment Account, Capital Account of the Partners and Balance Sheet of the new firm.

Ans.

Profit and loss adjustment a/c
Loss: Rs. 150
Balance sheet total
107500
Bank Balance
27900
Capital A/c

Ranade
44310
Kanade
29540
Hegade
18650
Share of goodwill bought by Hegade
9000


4. Amar and Akbar are the partners in a business sharing profits and losses in the ratio 3:2 respectively. Their Balance Sheet as on 31st March, 2012 stood as under.
Balance sheet as on 31st March, 2012

Liabilities
Rs.
Assets
Rs.
Sundry Creditors
12600
Land and Building
25000
Amar Capital A/c
27000
Furniture
3700
Akbar Capital A/c
18000
Stock
14500


Sundry Debtors
13400


Cash at Bank
1000









57600

57600

They admitted Amit on 1.4.2012 as a partner on the following terms.
1. Depreciate Furniture by Rs. 800 and stock by 10%.
2. Reserve of 5% on debtors be created for bad and doubtful debts.
3. Amit should bring in Rs. 7000 as capital and Rs. 4000 as Goodwill.
4. Amit will receive 1/8 th share in future profits.
5. The value of Land and Building be raised upto Rs. 32,000
6. The Capital accounts of all the partners be adjusted in proportion to their profit sharing ratio and excess amount be refunded to partner.
Prepare Profit and Loss Adjustment Account, Capital Accounts of Partners and Balance Sheet of the new firm.
Ans.

Profit and loss adjustment a/c
Profit 4080
Balance sheet total
68600
Bank Balance
7920
Capital A/c

Amar
29400
Akbar
19600
Amit
7000
New ratio
21:14:5


5. The following is the Balance Sheet of M/s Sukhadeo and Hanumant on 31st March, 2012. They share profits and losses in the proportion of 3/5 and 2/5 respectively.

Balance Sheet as on 31st March, 2012

Liabilities
Rs.
Assets
Rs.
Creditors
124000
Cash at Bank
10000
Capital A/c

Land and Building
50000
Sukhadeo
70,000
Plant and Machinery
70,000
Hanumant
70,000
Furniture
3000


Stock
41000


Debtors
90000





264000

264000

They take Shakuntala into partnership on 1st April, 2012. The terms being:

1. That she shall pay Rs. 10000 as her share of goodwill, the amount to be retained in the business.
2. That she shall bring in Rs. 30000 as capital for one – fourth share in the future profits.
3. The firm's assets were to be revalued as under:
a. Land and Building to be valued at Rs. 60,000; Plant and Machinery and Furniture to be reduced by 10%.
b. A provision of 5% on Debtors is to be made for doubtful debts.
c. The Stock is to be taken at a value of Rs. 50,000.
4. The excess of capital of Sukhadeo and Hanumant over their due proportion of sharing profit in the firm is to be transferred to their respective loan accounts.

Prepare Profit and loss Adjustment Account, Capital account of all partners and Opening Balance sheet of the firm.

Ans.

Profit and loss adjustment a/c
Profit Rs. 7200
Balance sheet total
311200
Bank Balance
50000
Capital A/c

Sukhadeo
54000
Hanumant
36000
Shakuntala
Rs. 30000


6. Sharad and Pankaj sharing profits in proportion of 3/5 and 2/5 respectively admit Nilesh into partnership on 1st April 2012 giving him ¼ share in profits on his agreeing to bring Rs. 10000 as capital. The old Partners guarantee the assets and liabilities as per the Balance Sheet given below.

You are required to draw up Profot & Loss Adjustment account and show the Balance sheet of the new Partnership after considering the other adjustments.
Balance sheet as on 31.03.2012
Liabilities
Rs.
Assets
Rs.
Creditors
5000
Cash
1000
Capital A/c

Investments
3000
Sharad
12000
Debtors   6000
(-) Reserve (- 500)
5500
Pankaj
4000
Stock
4500


Plant and Machinery
7000





21000

21000

It was later on discovered that:
1. A contingent liability of Rs. 500 not included in the above Balance Sheet had to be cleared.
2. Bad debts were expected to be Rs. 700.
3. Stock was revalued at Rs. 3000 because a part of it had been eaten by white ants.
4. Investments had been valued at Rs. 2700
Ans.

Profit and loss adjustment a/c
Loss Rs. 2500
Balance sheet total
28500
Cash A/c Bal.
10500
Capital A/c

Sharad
10500
Pankaj
3000
Nilesh
10000


7. Rajan & Padam are equal partners in a business. Their Balance Sheet as on 31st March, 2012 stood as under.
Balance sheet as on 31st March, 2012
Liabilities
Rs.
Assets
Rs.
Sundry Creditors
40000
Cash at Bank
60000
Bank Overdraft
20000
Debtors
30000
Bills Payable
30000
Furniture
12000
Reserve
18000
Machinery
24000
Capitals:

Building
27000
Rajan
45000


Padam
30000







183000

183000

On 1st April, 2012, they decide to admit Sharad on the following terms:
1. The Machinery, Building & Furniture be depreciated by 5%.
2. The Reserve at 5% be created for doubtful debts on debtors.
3. The Goodwill account for Rs. 30,000 be opened in the firm's book.
4. Sharad should bring Rs. 40000 as capital for his ¼ th share in the future profits.
5. The capital accounts of all the partners be adjusted in proportion to the new profit sharing ratio.
Prepare Profit & Loss Adjustment account and the balance sheet of the firm after admission of Sharad.
Ans.

Profit and loss adjustment a/c
Loss Rs. 6150
Balance sheet total
250000
Bank A/c Bal
103150
Capital A/c

Rajan
60000
Padam
60000
Sharad
40000


8. The following is the Balance Sheet of Ram and Laxman who share profits in the ratio 3:2 respectively as on 31st March, 2012.
Balance Sheet as on 31.03.2012
Liabilities
Rs.
Assets
Rs.
Creditors
15000
Plant and Machinery
24000
General Reserve
11000
Stock
16000
Capital Accounts:

Furniture
2000
Ram
30000
Debtors
30000
Laxman
20000
Cash at bank
4000





76000

76000

On this date Bharat was admitted on the following terms.
1. He has to pay Rs. 21,000 as his capital and Rs. 17,000 as his share of goodwill for 1/5 th share in future profits.
2. The amount of goodwill will be retained in the business.
3. Plant and Machinery and stock to be depreciated @ 10% and 5% respectively.
4. A provision of 6% on debtors be made for bad and doubtful debts.
5. Furniture to be revalued @ Rs. 3000
6. It was found that there was a liability for Rs. 1000 for credit purchases which was not recorded in the books of accounts.
Prepare Profit and Loss Adjustment account and Balance sheet of the firm after the admission of Bharat.
Ans.

Profit and loss adjustment a/c
Loss Rs. 5000
Balance sheet total
110000
Bank A/c Bal
42000
Capital A/c

Ram
43800
Laxman
29200
Bharat
21000


9. Mr. Baba and Mr. Kaka were in partnership sharing profits and losses in the proportion of 3:2 respectively. Their Balance Sheet as on 31st March, 2012 stood as follows:
Balance sheet as on 31. 03.2012
Liabilities
Rs.
Rs.
Assets
Rs.
Rs.
Capital A/c


Business Premises

140000
Mr. Baba
100000

Furniture & Fixtures

11400
Mr. Kaka
60000
160000
Stock

27000
Current A/c


Debtors

9100
Mr. Baba
1200

Cash at Bank

1100
Mr. Kaka
1400
2600



Loan From Mr. Chacha

20000



Creditors

6000





188600


188600
On 1st April 2012 Mr. Anna was admitted to the firm on the following terms:
(i) Business Premises were to be valued at Rs. 170000 and furniture and fixtures at Rs. 10400. A provision for Bad debts of Rs. 1000 was to be made. Stock should be revalued at Rs. 29,000.
(ii) Mr. Anna should bring in Rs. 40,000 as Capital and Rs. 10,000 as his share of goodwill and it was retained in the business and he should be given one – fourth share in the future profits.
(iii) The loan from Mr. Chacha was to be repaid.
Prepare Profit and Loss Adjustment Account, Partners Current accounts and Balance Sheet of the new firm.
Ans.

Profit and loss adjustment a/c
Profit Rs. 30,000
Balance sheet total
248600
Bank A/c Bal
31100
Current A/c

Baba
25200
Kaka
17400

10. Amol and Abhijeet share Profits and Losses in the ratio of 3:2 in partnership firm. Their Balance Sheet as on 31st March, 2012 was as under.
Balance Sheet as on 31st March, 2012
Liabilities
Rs.
Rs.
Assets
Rs.
Rs.
Creditors

12500
Bank

7500
Bills Payable

10000
Bills Receivable

3800
Bank Loan

16000
Debtors
20800

General Reserve

2500
Less: R.D.D.
800
20000
Capitals:


Stock

12000
Amol
15000

Furniture

4700
Abhijeet
12000
27000
Machinery

5000



Building

15000


68000


68000
On 1.4.2012 they admitted Ashok on the following terms:
(i) For 1/5 th share in profit in future. Ashok should being Rs. 10,000 for capital and Rs. 5000 for goodwill in cash.
(ii) Half of the amount of goodwill be withdrawn by old partners.
(iii) The stock is to be depreciated by 10% and Machinery by 5%.
(iv) R.D.D. be maintained at Rs. 1000
(v) Furniture should be appreciated to Rs. 5350 and building be appreciated by 20%.
Pass the necessary journal entries and open Revaluation A/c and Goodwill A/c in the books of the firm.
Ans.

Profit and loss adjustment a/c
Profit Rs. 2000
Balance sheet total
82500
Bank A/c Bal
20000
Capital A/c

Amol
19200
Abhijeet
14800
Ashok
10000

11. The following is the Balance Sheet of the firm Sangam Traders as on 31st March, 2012. Ganga and Yamuna are the partners of the firm who share profits and losses in the ratio of 3 : 2 respectively.
Balance Sheet as on 31st March, 2012
Liabilities
Rs.
Rs.
Assets
Rs.
Rs.
Creditors

24800
Cash at Bank

2000
Capital :


Building

10,000
Ganga
14000

Machinery

14000
Yamuna
14000
28000
Furniture

600



Stock

8200



Debtors

18000


52800


52800
They take Saraswati into partnership on 1st April, 2012 the terms being:
(i) That the new firm is to be retained as "Triveni Traders"
(ii) That Saraswati shall pay Rs. 2000 as her share of goodwill, the amount to be retained in business.
(iii) That she shall bring Rs. 6000 as capital for ¼ th share in the future profits.
(iv) The firm's assets were to be revalued as under:
Building to be valued at Rs. 12000; Machinery and Furniture to be reduced by 10%. A provision of 5% on debtors is to be made for doubtful debts. the stock is to be taken at a value of Rs. 10,000.
(v) The excess of capital of Ganga and Yamuna over their due proportion of sharing profits in the new firm is to be transferred to their respective loan account.
Prepare Profit and Loss Adjustment Account, Capital Account of Partners and Opening Balance Sheet of Triveni Traders.
Ans.

Profit and loss adjustment a/c
Profit. Rs. 1440
Balance sheet total
62240
Bank A/c Bal
10000
Capital A/c

Ganga
10800
Yamuna
7200
Saraswati
6000

12. Ram, Shyam and Bharat were partners sharing profits and losses in the ration of 2:3:3 respectively. Their Balance Sheet on 31st March, 2012 was as follows.
Balance Sheet as on 31st March, 2012
Liabilities
Rs.
Rs.
Assets
Rs.
Rs.
Bills Payable

10000
Cash in Hand

500
Trade Creditors

30000
Cash at Bank

22000
Loan from 'Usha'

20000
Bills Receivable

4500
General Reserve

16000
Trade Debtors

60000
Capital Account:


Stock in Trade

35000
Ram
20000

Furniture

2000
Shyam
27000

Building

29000
Bharat
30000
77000





153000


153000
On 1st April, 2012 they admitted Laxman into prtnership for ¼ th share on the following terms.
(i) Laxman should bring Rs. 25,000 as capital.
(ii) A goodwill account be opened in the books for Rs. 40,000 and the old partners be credited in their profit sharing ratio.
(iii) The value of stock in trade be reduced by 10%.
(iv) Building be appreciated by 15%.
(v) A provision for Bad Debts of Rs. 4000 be made.
(vi) An item of Rs. 502 included in Trade Creditors is not likely to be claimed and hence should be written off.
(vii) There being a claim for damages against the firm, a liability to the extent of Rs. 1000 should be created.
(viii) After Laxman's Admission in the firm Goodwill account should be written off.
Prepare (a) Profit and Loss Adjustment Account. (b) Balance Sheet of the new firm.

Ans.

Profit and loss adjustment a/c
Profit. Rs. 3648
Balance sheet total
174850
Bank A/c Bal
47000
Capital A/c

Ram
25588
Shyam
35382
Bharat
38382
Laxman
15000


13. Veena and Leela of Udgir are equal partners in a business. Their Balance Sheet as on 31st March, 2012 stood as under.
Balance Sheet as on 31st March, 2012
Liabilities
Rs.
Rs.
Assets
Rs.
Rs.
Sundry Creditor

180000
Cash at Bank

120000
General Reserve

36000
Debtors
62000

Capitals:


Less: RDD
2000
60000
Veena
90000

Bills Receivable

24000
Leela
60000
150000
Building

114000



Machinery

48000


366000


366000

They decided to admit Asha on 1st April, 2012 on the following terms.
(i) The machinery and the building be depreciated by 10% and Reserve for doubtful debts to be increased to Rs. 5000.
(ii) Bills Receivable are taken over by Veena at a discount of 10%.
(iii) Asha should bring Rs. 80,000 as capital for her ¼ th share in future profits.
(iv) The Capital accounts of all the partners be adjusted in proportion to the new profit sharing ratio by opening current accounts of the partners.
Prepare Profit and Loss Adjustment A/c Partners Capital Account and New Balance Sheet of the firm.

Ans.

Profit and loss adjustment a/c
Loss Rs. 21600
Balance sheet total
500000
Bank A/c Bal
200000
Capital A/c

Veena
120000
Leela
120000
Asha
80000


14. Raja and Rani were partners sharing profits and losses in proportion of their capitals. Their Balance Sheet on 31st March, 2012 was as under:
Balance Sheet as on 31st March, 2012
Particulars
Rs.
particulars
Rs.
Capitals:

Building
8000
Raja
14000
Furniture
2000
Rani
7000
Debtors
16000
General Reserve
6000
Stock
11000
Bills Payable
3000
Cash in Hand
3000
Creditors
10000



40000

40000
 On 1st April, 2012 they decided to admit Kanchan to partnership on the following terms:
(i) Kanchan to bring Rs. 12000 as capital for ¼ th share in future profits.
(ii) The goodwill of the firm to be valued at two years purchase of the average profit for the last 4 years and Kanchan to bring in her share of goodwill in cash.
(iii) The trading results for the last 4 years were: 2008-09 Rs. 18000 Profit, 2009 – 10 Rs. 18000 Profit, 2010 – 11 Rs. 9000 Loss and 2011 – 12 Rs. 21000 Profit.
(iv) The stock to be revalued at 90% of its book value.
(v) Building and Furniture to be depreciated by 10%.
(vi) The capitals of all partners in the new firm be adjusted in their new profit sharing ratio by making adjustments in cash and taking Kanchan's Capital as base.
You are required to prepare a profit and loss adjustment A/c the capital A/c of the partners and the Balance Sheet of the new firm.

Ans.

Profit and loss adjustment a/c
Loss 2100
Balance sheet total
61000
Cash A/c Bal
26100
Capital A/c

Raja
24000
Rani
12000
Kanchan
12000


 15. The following is the Balance Sheet of Shubha and Leena of Aurangabad who share profits in the ration 3:2 respectively as on 31.03.2012.
Balance Sheet as on 31.03.2012
Liabilities
Rs.
Assets
Rs.
Creditors
15000
Plant and Machinery
24000
General Reserve
11000
Stock
16000
Capital Accounts

Furniture
2000
Shubha
30000
Debtors
30000
Leena
20000
Cash at Bank
4000

76000

76000
They decided to admit Manjusha on 1st April, 2012 on the following terms:
1. She has to pay Rs. 20,000 as her capital and Rs. 17,000 as her share of Goodwill for 1/5 th share in future profits.
2. The amount of Goodwill to be retained in the business.
3. Plant and Machinery and Stock in trade to be depreciated @ 10% and 5% respectively.
4. A provision of 6% on debtors be made for Bad and Doubtful debts.
5. Furniture is to be revalued @ Rs. 3000.
Prepare Profit & Loss Adjustment Account, Partners capital Account and Balance Sheet of the firm after the admission of Manjusha.

Profit and Loss Adjustment Account:

Loss: 4000
Balance sheet total =
1,10,000
Bank A/c Bal.
Bank A/c Bal.
CA
42000
Capital Account

Subha
44000
Leena
29600
Manjusha
21000


16.  Madhu and Amar are partners in a firm sharing profits and losses in the proportion of 3/5 and 2/5 respectively. Their Balance Sheet as on 31st March, 2012 was as follows:
Balance sheet as on 31.03.2012
Liabilities
Rs.
Assets
Rs.
Madhu's Capital
35000
Sundry Debtors
45000
Amar's Capital
35000
Land and Building
25000
Sundry Creditors
62000
Stock
20500


Cash at Bank
5000


Plant and Machinery
35000


furniture and Fixtures
1500

132000

132000
They have admitted Vasant into Partnership.  the terms being that:
1. He shall pay Rs. 5000 as his share of goodwill, the amount of goodwill retained into business.
2. He shall bring Rs. 15000 as his capital for ¼ share in future profits.
3. For the purpose of Vasant's admission, it was agreed that the assets would be revalued as follows:
a. Land and Building to be taken at Rs. 30,000.
b. Plant and Machinery to be valued at Rs. 32000.
c. A provision of 5% on debtors would be made against doubtful debts.
d. The value of stock at Rs. 25000.
Prepare Profit and Loss Adjustment Account. Partners Capital Account and Balance Sheet of the new firm.

Ans.

Profit & Loss Adjustment A/c
Profit = Rs. 4250
Balance Sheet Total
156250
Bank A/c Balance
25000
Capital A/c

Madhu
40550
Amar
38700
Vasant
15000


17. Manish and Nitin are partners in a firm sharing Profits and Losses in the ratio of 3:1. Their Balance Sheet as on 31st March, 2012 was as follows:
Balance Sheet as on 31.03.2012
Liabilities
Rs.
Assets
Rs.
Manish's Capital
30000
Cash in Hand
2500
Nitin's Capital
16000
Bills Receivable
6000
Creditors
18000
Debtors
16000
Bills Payable
3000
Stock
20000
General Reserve
4000
Furniture
1500


Land and Building
25000

71000

71000
Sachin is admitted as a partner in the firm on 1st April, 2012 on the following terms:
1. Sachin is to pay Rs. 20,000 as capital for 1/5 th share in future profit and he should bring Rs. 4000 for goodwill.
2. Stock and Furniture to be reduced by 10%.
3. R.D.D. is to be made at 5% on the debtors.
4. Land and Building is to be appreciated by 20%.
You are required to prepare Profit and Loss Adjustment A/c, partner's Capital Accounts and Balance Sheet of the new firm.

Ans.

Profit & Loss Adjustment A/c
Profit Rs. 2050
Balance Sheet Total
Rs. 97050
Cash A/c
Rs. 25600
Capital A/c

Manish
Rs. 37538
Nitin
Rs. 18512
Sachin
Rs. 20000



18. Ajeet and Sujeet are partners in a firm, sharing profits and losses equally. Their Balance Sheet as on 31st March, 2012 was as follows.
Balance Sheet as on 31.3.2012
Liabilities
Amount
Assets
Amount
Ajeet’s Capital
12000
Cash
800
Sujeet’s Capital
10000
Stock
8000
General Reserve
1000
Sundry Debtors
7200
Sundry Creditors
15000
Loose Tools
3000
Bills Payable
2000
Furniture
2000


Motor Van
7000


Plant & Machinery
12000

40000

40000
They agree to admit Abhijit as a partner on 1st April, 2012 on the following terms:
1. He shall have ¼ share in future profits.
2. He shall bring Rs. 8000 as his capital and Rs. 4000 as goodwill.
3. Ajeet and Sujeet withdraw 50% of the amount of goodwill.
4. Motor Van is to be depreciated by 10% and stock is revalued at Rs. 7000.
5. Plant & Machinery is to be appreciated by 20%.
6. An amount of Rs. 1200 included in creditors is no longer liability and hence, required to be properly adjusted.
Prepare Profit & Loss Adjustment A/c, Partners Capital A/cs and Balance Sheet of new firm.