Double Entry Book Keeping Ts Grewal Volume I 2021-2022 Solutions for Class 12

Commerce Accountancy Chapter 5 - Admission Of A Partner

Page No 5.106:

Question 81:

Kalpana and Kanika were partners in a firm sharing profits in 3 : 1 ratio. They admitted Karuna as a partner for 1/4th share in the future profits. Karuna was to bring ` 60,000 for his capital. The Balance Sheet of Kalpana and Kanika as at 1st April, 2021, the date on which Karuna was admitted, was:


Liabilities		`	Assets		`
Capital A/cs:			Land and Building		40,000
Kalpana	50,000		Plant ad Machinery		70,000
Kanika	80,000	1,30,000	Stock		30,000
General Reserve		10,000	Debtors	35,000
Creditors		70,000	Less: Provision for Doubtful Debts	1,000	34,000
			Investments		26,000
			Cash		10,000
		2,10,000			2,10,000

The other terms agreed upon were:
(a) Goodwill of the firm was valued at   ` 24,000.
(b) Land and Building were valued at   ` 65,000 and Plant and Machinery at   ` 60,000.
(c) Provision for Doubtful Debts was found in excess by   ` 400.
(d) A liability of   ` 1,200 included in Sundry Creditors was not likely to arise.
(e) The capitals of the partners be adjusted on the basis of C's contribution of capital to the firm.
(f) Excess of shortfall, if any, be transferred to Current Accounts.
Prepare Revaluation Account, Partners' Capital Accounts and Balance Sheet of the new firm.

Answer:

Revaluation Account
Dr.			Cr.
Particulars	Amount `	Particulars	Amount `
Plant and Machinery (70,000 – 60,000)	10,000	Land and Building (65,000 – 40,000)	25,000
Profit transferred to		Provision for Doubtful Debts	400
Kalpana’s Capital	12,450	Creditors	1,200
Kanika’s Capital	4,150

	26,600		26,600

Partners’ Capital Accounts
Dr.							Cr.
Particulars	Kalpana	Kanika	Karuna	Particulars	Kalpana	Kanika	Karuna
				Balance b/d	50,000	80,000
				General Reserve	7,500	2,500
				Revaluation (Profit)	12,450	4,150
				Cash			60,000
Balance c/d	74,450	88,150	60,000	Karuna 's Current A/c	4,500	1,500
	74,450	88,150	60,000		74,450	88,150	60,000

Kanika’s Current A/c		43,150		Balance b/d	74,450	88,150	60,000
Balance c/d (Adjusted)	1,35,000	45,000	60,000	Kalpna’s Current A/c	60,550
	1,35,000	88,150	60,000		1,35,000	88,150	60,000

Balance Sheet as on April 01, 2021 after Karuna’s admission
Liabilities		Amount `	Assets		Amount `
Creditors (70,000 – 1,200)		68,800	Land and Building		65,000
Capital A/cs:			Plant and Machinery		60,000
Kalpana	1,35,000		Stock		30,000
Kanika	45,000		Debtors	35,000
Karuna	60,000	2,40,000	Less: Prov. for Doubtful Debts	600	34,400
Kanika’s Current A/c		43,150	Investments		26,000
			Cash		70,000
			Kalpana’s Current A/c		60,550
			Karuna 's Current A/c		6,000
		3,51,950			3,51,950

Working Notes:

WN1

	Kalpana	Kanika
OLD RATION	3 :	1
SACRIFICING RATIO	3 :	1

WN2
Karuna ‘s of goodwill=24,000×1/4=6,000

Kalpana will get =6,000×3/4=4,500

Kanika will get =6,000×1/4=1,500

As Karuna has not brought his share of goodwill in cash, hence, his share shall be debited to his current account.

WN3 Distribution of Revaluation Profit
Kalpana will get =16,600×3/4=12,450

Kanika will get =16,600×1/4=4,150

WN4 Adjustment of Capital

Total Capital of the firm after Karuna’s admission	=	60,000 × 4	=	2,40,000
Less: Karuna’s Capital			=	60,000
Combined Capital of Kalpana and Kanika			=	1, 80,000

Kalpana’s proportion of capital=1,80,000×3/4=1,35,000

Kanika’s proportion of capital =1,80,000×1/4=45,000

WN5

Cash Account
Dr.			Cr.
Particulars	Amount `	Particulars	Amount `
Balance b/d	10,000	Balance c/d	70,000
Karuna’s Capital	60,000	(Balancing Figure)
	70,000		70,000

Page No 5.106:

Question 82:

Shikhar and Rohit were partners in a firm sharing profits in the ratio of 7 : 3. On 1st April, 2013, they admitted Kavi as a new partner for 1/4th share in profits of the firm. Kavi brought ` 4,30,000 as his capital and ` 25,000 for his share of goodwill premium. The Balance Sheet of Shikhar and Rohit as on 1st April, 2013 was as follows:

BALANCE SHEET OF SHIKHAR AND ROHIT as at 1st April, 2013
Liabilities		`	Assets		`
Capital A/cs:			Land and Building		3,50,000
Shikhar	8,00,000		Machinery		4,50,000
Rohit	3,50,000	11,50,000	Debtors	2,20,000
General Reserve		1,00,000	Less: Provision	20,000	2,00,000
Workmen's Compensation Fund		1,00,000	Stock		3,50,000
Creditors		1,50,000	Cash		1,50,000

		15,00,000			15,00,000

It was agreed that:
(a) the value of Land and Building will be appreciated by 20%.
(b) the value of Machinery will be depreciated by 10%.
(c) the liabilities of Workmen's Compensation Fund were determined at ` 50,000.
(d) capitals of Shikhar and Rohit will be adjusted on the basis of Kavi's capital and actual cash to be brought in or to be paid off as the case may be.
Prepare Revaluation Account, Partners' Capital Accounts and Balance Sheet of the new firm.

Answer:

Revaluation Account
Dr.					Cr.
Particulars		Amount `	Particulars	Amount `
Machinery		45,000	Land and Building	70,000
Profit transferred to:
Shikhar’s Capital A/c	17,500
Rohit’s Capital A/c	7,500	25,000

		70,000		70,000

Partners’ Capital Accounts
Dr.					Cr.
Particulars	Shikhar	Rohit	Kavi	Particulars	Shikhar	Rohit	Kavi
				Balance b/d	8,00,000	3,50,000
Balance c/d	9,40,000	4,10,000	4,30,000	General Reserve	70,000	30,000
				Workmen’s Compensation Fund	35,000	15,000
				Cash A/c			4,30,000
				Premium for Goodwill	17,500	7,500
				Revaluation A/c (Profit)	17,500	7,500

	9,40,000	4,10,000	4,30,000		9,40,000	4,10,000	4,30,000
Cash A/c	37,000	23,000		Balance b/d	9,40,000	4,10,000	4,30,000
Balance c/d	9,03,000	3,87,000	4,30,000
	9,40,000	4,10,000	4,30,000		9,40,000	4,10,000	4,30,000

Balance Sheet as on April 01, 2013 after Kavi’s admission
Liabilities		Amount `	Assets		Amount `
Liability for Workmen’s Compensation		50,000	Land and Building		4,20,000
Creditors		1,50,000	Machinery	4,50,000
Capitals:			Less: Depreciation @10%	45,000	4,05,000
Shikhar	9,03,000		Debtors	2,20,000
Rohit	3,87,000		Less: Provision	20,000	2,00,000
Kavi	4,30,000	17,20,000	Stock		3,50,000
			Cash		5,45,000
		19,20,000			19,20,000

Calculation of Profit Sharing Ratio:

	A	B
OLD RATION	3 :	1

Kavi’s share=1/4

Let total capital =1

Remaining share of the firm=1-1/4=3/4

Shikhar’s new share= 7/10×3/4=21/40

Rohit’s new share=3/10× 3/4=9/40

New profit sharing ratio

=21/40:9/40:1/4

=21:9:10

Sacrificing Ratio =Old ratio- new ratio

Shikhar = 7/10-21/40=7/40

Rohit =3/10- 9/40=3/40

Sacrificing Ratio =7:3

WN1: Distribution of Goodwill brought in by Kavi:

Shikhar will get =25,000×7/10=17,500

Rohit will get =25,000×3/10=7,500

WN2: Distribution of Workmen’s Compensation Fund

Shikhar will get =50,000×7/10=35,000

Rohit will get =50,000×3/10=15,000

WN3: Distribution of General Reserve:

Shikhar will get =1,00,000×7/10=70,000

Rohit will get =1,00,000×3/10=30,000

WN4: Adjustment of Capital:

Total capital of the firm= capital brough by new partner × reciprocal of share

capital brough by kavi =4,30,000

Total capital of the firm= 4,3000 × 4/1=17,40,000

Shikhar’s new of capital=17,40,000×21/40=9,03,000

Rohit’s new of capital =17,40,000×9/40=3,87,000

Page No 5.107:

Question 83:

The Balance Sheet of X, Y and Z who share profits and losses in the ratio of 3 : 2 : 1, as on 1st April, 2021 is as follows:


Liabilities		`	Assets	`
Capital A/cs:			Y's Current Account	7,000
X	1,75,000		Land and Building	1,75,000
Y	1,50,000		Plant and Machinery	67,500
Z	1,25,000	4,50,000	Furniture	80,000
Current A/cs:			Investments	36,500
X	4,000		Bills Receivable	17,000
Z	6,000	10,000	Sundry Debtors	43,500

General Reserve		15,000	Stock	1,37,000
Profit and Loss A/c		7,000	Bank	43,500
Creditors		80,000
Bills Payable		45,000

		6,07,000		6,07,000

On the above date, W is admitted as a partner on the following terms:

(a) W will bring ` 50,000 as his capital and get 1/6th share in the profits.
(b) He will bring necessary amount for his share of goodwill premium. Goodwill of the firm is valued at ` 90,000.
(c) New profit-sharing ratio will be 2 : 2 : 1 : 1.
(d) A liability of ` 7,004 will be created against bills receivable discounted earlier but now dishonored.
(e) The value of stock, furniture and investments is reduced by 20%, whereas the value of Land and Building and Plant and Machinery will be appreciated by 20% and 10% respectively.
(f) Capital Accounts of the partners will be adjusted on the basis of W's Capital through their Current Accounts.
Prepare Revaluation Account, Partners' Current Accounts and Capital Accounts.

Answer:

Revaluation Account
Dr.					Cr.
Particulars	Amount `	Particulars		Amount `
Stock	27,400	Land and Building		35,000
Furniture	16,000	Plant and Machinery		6,750
Investments	7,300	Loss transferred to:
		X	4,475
		Y	2,983
		Z	1,492	8,950
	50,700			50,700

Partners’ Current Account
Dr.				Cr.
Particulars	X	Y	Z	Particulars	X	Y	Z
Balance b/d		7,000		Balance b/d	4,000		6,000
Revaluation (Loss)	4,475	2,983	1,492	General Reserve	7,500	5,000	2,500
				Profit and Loss A/c	3,500	2,333	1,167
Balance c/d	100,525	47,350	83,175	Premium for Goodwill	15,000
				Capital A/c	75,000	50,000	75,000
	1,05,000	57,333	84,667		1,05,000	57,333	84,667

Partners’ Capital Account
Dr.					Cr.
Particulars	X	Y	Z	W	Particulars	X	Y	Z	W
Current A/c	75,000	50,000	75,000		Balance b/d	1,75,000	1,50,000	1,25,000
					Cash A/c				50,000
Balance c/d	1,00,000	1,00,000	50,000	50,000
	1,75,000	1,50,000	1,25,000	50,000		1,75,000	1,50,000	1,25,000	50,000

Working Notes:

WN1Calculation of Sacrificing Ratio

Old Ratio=3 : 2 : 1

New Ratio=2 : 2 : 1 : 1

Sacrificing Ratio=Old Ratio-New Ratio

X=3/6-2/6=1/6

Y=2/6-2/6=Nil

Z=1/6-1/6=Nil

Here, only X has sacrificed.

WN2 Distribution of Goodwill

W's Share of Goodwill=90,000×16= ` 15,000

As only X has sacrificed his share, therefore, he will get ` 15,000

WN3 Adjustment of Capital

Total Capital of the firm=W's Capital×Reciprocal of his share

=50,000×6/1= ` 3,00,000

New Profit Sharing Ratio=2 : 2 : 1 : 1

X's New Capital=3,00,000×2/6= ` 1,00,000

Y's New Capital=3,00,000×2/6= ` 1,00,000

Z's New Capital=3,00,000×1/6= ` 50,000

W's New Capital=3,00,000×1/6= ` 50,000

Page No 5.107:

Question 84:

Raghu and Rishu are partners sharing profits in the ratio 3 : 2. Their Balance Sheet as at 31st March, 2021 was as follows:

BALANCE SHEET OF RAGHU AND RISHU *as at 31st March, 2021*
Liabilities		`	Assets		`
Creditors		86,000	Cash in Hand		77,000
Employees' Provident Fund		10,000	Debtors	42,000
Investments Fluctuation Reserve		4,000	Less: Provision for Doubtful Debts	7,000	35,000
Capital A/cs:			Investments		21,000
Raghu	1,19,000		Buildings		98,000
Rishu	1,12,000	2,31,000	Plant and Machinery		1,00,000

		3,31,000			3,31,000

Rishabh was admitted on that date for 1/4th share of profit on the following terms:
(a) Rishabh will bring   ` 50,000 as his share of capital.
(b) Goodwill of the firm is valued at   ` 42,000 and Rishabh will bring his share of goodwill in cash.
(c) Buildings were appreciated by 20%.
(d) All Debtors were good.
(e) There was a liability of   ` 10,800 included in Creditors which was not likely to arise.
(f) New profit-sharing ratio will be 2 : 1 : 1.
(g) Capital of Raghu and Rishu will be adjusted on the basis of Rishabh's share of capital and any excess or deficiency will be made by withdrawing or bringing in cash by the concerned partners as the case may be.
Prepare Revaluation Account, Partners' Capital Accounts and Balance Sheet of the new firm.

Answer:

Revaluation Account
Dr.						Cr.
Particulars		Amount `	Particulars			Amount `
Profit on Revaluation transferred to-			Building			19,600
Raghu’s Capital A/c	22,440		Provision for Doubtful Debts (Old)			7,000
Rishu’s Capital A/c	14,960	37,400	Liability for Creditors			10,800
		37,400				37,400

Partners’ Capital Account
Dr.									Cr.
Particulars	Raghu		Rishu	Rishabh	Particulars		Raghu	Rishu	Rishabh
					Balance b/d		1,19,000	1,12,000
Cash A/c (Bal. Fig.)	48,040		84,860		Cash A/c				50,000
Balance c/d	1,00,000		50,000	50,000	Investment Fluctuation Fund		2,400	1,600
					Premium for Goodwill		4,200	6,300
					Revaluation A/c (Profit)		22,440	14,960

	1,48,040		1,34,860	50,000			1,48,040	1,34,860	50,000

Balance Sheet as on March 31, 2021
Liabilities		Amount `	Assets	Amount `
Creditors	86,000		Cash (WN4)	4,600
Less: Liability	(10,800)	75,200	Debtors	42,000
Employees Provident Fund		10,000	Investments	21,000
Capital A/cs:			Buildings (98,000 + 19,600)	1,17,600
Raghu	1,00,000		Plant and Machinery	1,00,000
Rishu	50,000
Rishabh	50,000	2,00,000

		2,85,200		2,85,200

Working Notes:

WN 1Calculation of Sacrificing Ratio

Old Ratio = 3 : 2

New Ratio = 2 : 1 : 1

Sacrificing Ratio = Old ratio – New Ratio

Raghu = 3/5-2/4=10-12/20=2/20

Rishu =2/5-1/4=8-5/20=3/20

Sacrificing Ratio =2:3

WN 2Share of Rishabh’s Share of Goodwill

Value of Firm’s Goodwill = 42,000

Rishabh‘s share of goodwill=42,000×1/4=10,500

WN 3Adjustment of Capital

Total Capital of New Firm = Rishabh’s Capital × Reciprocal of Rishabh’s Share

Capital of Rishabh = ` 50,000

Total capital of the firm= capital brough by new partner × reciprocal of share

Total capital of the firm= 50,000 × 4/1=2,00,000

Raghu‘s new capital= 2,00,000× 2/4=1,00,000

Rishu‘s new capital= 2,00,000× 1/4 =50,000

WN 4 Cash Account

Cash Account
Dr.			Cr.
Particulars	Amount `	Particulars	Amount `
Balance b/d	77,000	Raghu’s Capital	48,040
Rishabh’s Capital	50,000	Rishu’s Capital	84,860
Premium for Goodwill	10,500	Balance c/d	4,600
	1,37,500		1,37,500

Page No 5.108:

Question 85: A and B were partners sharing profits and losses in the ratio of 3:2. Their Balance Sheet as at 31st March, 2018, was as follows:

BALANCE SHEET OF A AND B as at 31st March, 2018
Liabilities		`	Assets		`
Capitals:			Cash		8,000 36,000 60,000 6,000 76,000 1,40,000 20,000
A B	1,04,000 52,000	1,56,000	Sundry Debtors Less: Provision for Doubtful Debts	37,600 1,600
Creditors Employees' Provident Fund Workmen Compensation Fund Contingency Reserve		1,54,000 16,000 10,000 10,000	Stock Prepaid Insurance Plant and Machinery Building Furniture
		3,46,000			3,46,000

C was admitted as a new partner and brought 64,000 as capital and 15,000 for his share of goodwill premium.

The new profit-sharing ratio was 5 : 3 :2. On C's admission the following was agreed upon:

(i) Stock was to be depreciated by 5%.

(ii) Provision for doubtful debts was to be made at `2,000.

(iii) Furniture was to be depreciated by 10%.

(iv) Building was valued at `1,60,000.

(v) Capitals of A and B were to be adjusted on the basis of C's capital by bringing or paying of cash as the case may be.

Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet of reconstituted firm. (CBSE 2021)

Answer:

Revaluation Account
Dr.											Cr.
Particulars						Amount `			Particulars		Amount `
To Stock To Provision for D.D. To Furniture To Profit transferred to						3,000 400 2,000			By Building		20,000
A=14,600×3/5=			8,760
B=14,600×2/5=			5,840			14,600
						20,000					20,000

Partners’ Capital Account
Dr.															Cr.
Particulars		A			B			C		Particulars			A	B	C
Balance c/d		1,32,260			73,340			64,000		Balance b/d			1,04,000	52,000
										Cash A/c					64,000

										Premium for Goodwill			7,500	7,500
										Revaluation A/c (Profit)			8,760	5,840
										Workers’ compensation reserve Contingency reserve			6000 6000	4000 4000
		1,32,260			73,340			64,000					1,32,260	73,340	64,000
Balance c/d		1,60,000			96,000			64,000		Balance b/d Cash A/c			1,32,260 27,740	73,340 22,660	64,000
		1,60,000			96,000			64,000					1,60,000	96,000	64,000




Balance Sheet as on March 31, 2019
Liabilities				Amount `			Assets					Amount `
Creditors				1,54,000			Cash (8,000+64,000+15,000+50,000)					1,87,400
							Debtors 37,600 Less; Prov. For D.D. 2,000					35,000
Employees Provident Fund				16,000			Stock Prepaid Insurance Plant and Machinery Building					57,000 6,000 76,000 1,60,000
Capital A/cs:							Furniture					18,000
Raghu	1,60,000
Rishu	96,000
Rishabh	64,000			3,20,000

				4,90,000								4,90,000