12th Accountancy - Book Back Answers - Unit 5 - English Medium Guides

  

 

12th - Accountancy - Book Back Answers -  Unit 5 - English Medium

Tamil Nadu Board 12th Standard Accountancy - Unit 5: Book Back Answers and Solutions

    This post covers the book back answers and solutions for Unit 5 –  from the Tamil Nadu State Board 12th Standard Accountancy textbook. These detailed answers have been carefully prepared by our expert teachers at KalviTips.com.

    We have explained each answer in a simple, easy-to-understand format, highlighting important points step by step under the relevant subtopics. Students are advised to read and memorize these subtopics thoroughly. Once you understand the main concepts, you’ll be able to connect other related points with real-life examples and confidently present them in your tests and exams.

    By going through this material, you’ll gain a strong understanding of Unit 5 along with the corresponding book back questions and answers (PDF format).

Question Types Covered:

• 1 Mark Questions: Choose the correct answer, 
• 2 Mark Questions: Very Short Answer Questions
• 3, 4, and 5 Mark Questions: Short Answer Questions, Excercises
  

All answers are presented in a clear and student-friendly manner, focusing on key points to help you score full marks.

All the best, Class 12th students! Prepare well and aim for top scores. Thank you!

Unit 5 : Admission of a partner

I. Choose the correct Answer

1. Revaluation A/c is a …………….

(a) Real A/c

(b) Nominal A/c

(c) Personal A/c

(d) Impersonal A/c

Answer Key:

(b) Nominal A/c

 

2. On revaluation, the increase in the value of assets leads to ……………..

(a) Gain

(b) Loss

(c) Expense

(d) None of these

Answer Key:

(a) Gain

 

3. The profit or loss on revaluation of assets and liabilities is transferred to the capital account of ……………..

(a) The old partners

(b) The new partner

(c) All the partners

(d) The Sacrificing partners

Answer Key:

(a) The old partners

 

4. If the old profit sharing ratio is more than the new profit sharing ratio of a partner, the difference is called ……………..

(a) Capital ratio

(b) Sacrificing ratio

(c) Gaining ratio

(d) None of these

Answer Key:

(b) Sacrificing ratio

 

5. At the time of admission, the goodwill brought by the new partner may be credited to the capital accounts of ……………..

(a) all the partners

(b) the old partners

(c) the new partner

(d) the sacrificing partners

Answer Key:

(d) the sacrificing partners

 

6. Which of the following statements is not true in relation to admission of a partner?

(a) Generally mutual rights of the partners change

(b) The profits and losses of the previous years are distributed to the old partners

(c) The firm is reconstituted under a new agreement

(d) The existing agreement does not come to an end

Answer Key:

(d) The existing agreement does not come to an end

 

7. Match List I with List II and select the correct Answer Key using the codes given below:

List I				List II
(i) Sacrificing ratio				- 1. Investment fluctuation fund
(ii) Old profit sharing ratio				- 2. Accumulated profit
(iii) Revaluation Account				- 3. Goodwill
(iv) Capital Account				- 4. Unrecorded liability
Codes:		(i)	(ii)	(iii)	(iv)
	(a)	1	2	3	4
	(b)	3	2	4	1
	(c)	4	3	2	1
	(d)	3	1	2	4

Answer Key:
(b) 3 2 4 1

 

8. Select the odd one out:

(a) Revaluation profit

(b) Accumulated loss

(c) Goodwill brought by new partner

(d) Investment fluctuation fund

Answer Key:

(c) Goodwill brought by new partner

 

9. James and Kamal are sharing profits and losses in the ratio of 5:3. They admit Sunil as a partner giving him 1/5 share of profits. Find out the sacrificing ratio.

(a) 1:3

(b) 3:1

(c) 5:3

(d) 3:5

Answer Key:

(c) 5:3

 

10. Balaji and Kamalesh are partners sharing profits and losses in the ratio of 2:1. They admit Yogesh into partnership. The new profit sharing ratio between Balaji, Kamalesh and Yogesh is agreed to 3:1:1. Find the sacrificing ratio between Balaji and Kamalesh.
(a) 1:3
(b) 3:1
(c) 2:1
(d) 1:2
Answer Key:
(d) 1:2

II.Very short answer questions

1.  What is meant by revaluation of assets and liabilities?

• When a partner is admitted into the partnership, the assets and liabilities are revalued as the current value may differ from the book value. Determination of current values of assets and liabilities is called revaluation of assets and liabilities.

 

2. How are accumulated profits and losses distributed among the partners at the time of admission of a new partner?

• Profits and losses of previous years which are not distributed to the partners.  
• Any reserve and accumulated profits and losses belong to the old partners, these distributed old profit-sharing ratio.

 

3. What is sacrificing ratio?

• The old partners may sacrifice a portion of the share of profit to the new partner. The sacrifice may be made by all the partners or some of the partners. Sacrificing ratio is the proportion of the profit which is sacrificed or foregone by the old partners in favour of the new partner. Sacrificing ratio = Ratio of share sacrificed by the old partners

 

4. Give the journal entry for writing off existing goodwill at the time of admission of a new partner.

 

Date	Particulars	L.F	Debit	Credit
	Old partners’ capital / current A/c                 Dr To Goodwill A/c (Existing goodwill written off)		xxx	xxx

 

5.  State whether the following will be debited or credited in the revaluation account.

(a) Depreciation on assets  
(b Unrecorded liability   
(c) Provision for outstanding expenses  
(d) Appreciation of assets  

(a)   Depreciation on assets - Debit Account

(b)  Unrecorded liability - Debit Account

(c)   Provision for outstanding expenses - Debit Account

(d)  Appreciation of assets - Credit Account

 

III.Short questions

1.  What are the adjustments required at the time of admission of a partner?

•  Distribution of accumulated profits, reserves and losses
• Revaluation of assets and liabilities
• Determination of new profit-sharing ratio and sacrificing ratio
• Adjustment for goodwill
• Adjustment of capital on the basis of new profit sharing ratio (if so agreed)

2. What are the journal entries to be passed on revaluation of assets and liabilities?

3.Write a short note on accounting treatment of goodwill.

• When new partner brings cash towards goodwill
• When the new partner does not bring goodwill in cash or in kind
• When the new partner brings only a part of the goodwill in cash or in kind
• Existing goodwill

 

IV. Excercises

Question 1.
Arul and Anitha are partners sharing profits and losses in the ratio of 4 : 3. On 31.3.2018, Ajay was admitted as a partner. On the date of admission, the book of the firm showed a general reserve of Rs. 42,000. Pass the journal entry to distribute the general reserve.
Answer Key:

Question 2.
Anjali and Nithya are partners of firm sharing profits and losses in the ratio of 5 : 3. They admit Pramila on 1.1.2018. On that date, their balance sheet showed an accumulated loss of Rs. 40,000 on the asset side of the balance sheet. Give the journal entry to transfer the accumulated loss on admission.
Answer Key:

 

Question 3.
Oviya and Kavya are partners in firm sharing profits and losses in the ratio of 5:3. They admit Agalya into the partnership. Their balance sheet as on 31st March, 2019 is as follows:
Balance Sheet as on 31st March 2019

Pass journal entry to transfer the accumulated profits and reserve on admission.

Question 4.
Hari, Madhavan and Kesavan are partners, sharing profits and losses in the ratio of 5:3:2. As of 1st April 2017, Vanmathi is admitted into the partnership and the new profit sharing ratio is decided as 4:3:2:1. The following adjustments are to be made.
1.Increase the value of premises by Rs. 60,000.
2.Depreciate stock by Rs. 5,000, furniture by RS 2,000 and machinery by Rs. 2,500.
3.Provide for an outstanding liability of Rs. 500.
Pass journal entries and prepare revaluation account.

 Journal Entries

Revaluation Account

Question 5.
Seenu and Siva are partners sharing profits and losses in the ratio of 5:3. In view of Kowsalya admission, they decided
1.To increase the value of the building by Rs. 40,000.
2.To bring into record investments at Rs. 10,000, which have not so far been brought into account.
3.To decrease the value of machinery by Rs. 14,000 and furniture by Rs. 12,000.
4.To write off sundry creditors by Rs. 16,000.
Pass journal entries and prepare revaluation account.

Revaluation Account

Question 6.
Sai and Shankar are partners, sharing profits and losses in the ratio of 5 : 3. The firm’s balance sheet as on 31st December 2017, was as follows:

On 31st December 2017 Shanmugam was admitted into the partnership for 1/4 share of profit with RS 12,000 as capital subject to the following adjustments.
1.Furniture is to be revalued at RS 5,000 and building is to be revalued at RS 50,000
2.Provision for doubtful debts is to be increased to RS 5,500
3.An unrecorded investment of RS 6,000 is to be brought into account
4.An unrecorded liability RS 2,500 has to be recorded now
Pass journal entries and prepare Revaluation Account and capital account of partners after admission.
Journal Entries

Revaluation Account

Capital Account

 Question 7.
Amal and Vimal are partners in firm sharing profits and losses in the ratio of 7 : 5. Their balance sheet as on 31st March, 2019, is as follows:

Nirmal is admitted as a new partner on 1.4.2018 by introducing a capital of 30,000 for 1/3 share in the future profit subject to the following adjustments.
1.Stock to be depreciated by RS 5,000
2.Provision for doubtful debts to be created for RS 3,000
3.Land to be appreciated by RS 20,000
Prepare revaluation account and capital account of partners after admission.

Answer Key:
Revaluation Account

Capital Account

Question 8.
Praveena and Dhanya are partners sharing profits in the ratio of 7 : 3. They admit Malini into the firm. The new ratio among Praveena, Dhanya and Malini is 5 : 2 : 3. Calculate the sacrificing ratio.
Answer Key: 

Sacrificing Ratio = Old Ratio - New Ratio

Praveena $\mathbf{=}\frac{\mathbf{7}}{\mathbf{10}}\mathbf{-}\frac{\mathbf{5}}{\mathbf{10}}\mathbf{=}\frac{\mathbf{2}}{\mathbf{10}}$

Dhanya $\mathbf{=}\frac{\mathbf{3}}{\mathbf{10}}\mathbf{-}\frac{\mathbf{2}}{\mathbf{10}}\mathbf{=}\frac{\mathbf{1}}{\mathbf{10}}$

acrificing Ratio = 2:1

 

Question 9.
Ananth and Suman are partners sharing profits and losses in the ratio of 3 : 2. They admit Saran for 1/5 share, which he acquires entirely from Ananth. Find out the new profit sharing ratio and sacrificing ratio.
Answer Key:

New sharing profit Ratio:

Ananth $\mathbf{=}\frac{\mathbf{3}}{\mathbf{5}}\mathbf{-}\frac{\mathbf{1}}{\mathbf{5}}\mathbf{=}\frac{\mathbf{2}}{\mathbf{5}}$

Suman $\mathbf{=}\frac{\mathbf{2}}{\mathbf{5}}$

Ananth $\mathbf{=}\frac{\mathbf{1}}{\mathbf{5}}$

New Profit Sharing Ratio=2:2:1

Sacrificing Ratio = 1:0

Question 10.
Raja and Ravi are partners, sharing profits in the ratio of 3 : 2. They admit Ram for 1/4 share of the profit. He takes 1/20 share from Raja and 4/20 from Ravi. Calculate the new profit sharing ratio and sacrificing ratio.
Answer Key:

New Profit Sharing Ratio = Old Ratio - Sacrificing Ratio

Raja $\mathbf{=}\frac{\mathbf{3}}{\mathbf{5}}\mathbf{-}\frac{\mathbf{1}}{\mathbf{20}}\mathbf{=}\frac{\mathbf{12}\mathbf{-}\mathbf{1}}{\mathbf{20}}\mathbf{=}\frac{\mathbf{11}}{\mathbf{20}}$

Ravi $\mathbf{=}\frac{\mathbf{2}}{\mathbf{5}}\mathbf{-}\frac{\mathbf{4}}{\mathbf{20}}\mathbf{=}\frac{\mathbf{8}\mathbf{-}\mathbf{4}}{\mathbf{20}}\mathbf{=}\frac{\mathbf{4}}{\mathbf{20}}$

Ram $\mathbf{=}\frac{\mathbf{1}}{\mathbf{20}}\mathbf{+}\frac{\mathbf{4}}{\mathbf{20}}\mathbf{=}\frac{\mathbf{5}}{\mathbf{20}}$

New Profit Sharing Ratio = 11:4:5

Sacrificing Ratio $\mathbf{=}\frac{\mathbf{11}}{\mathbf{20}}\mathbf{:}\frac{\mathbf{4}}{\mathbf{20}}$

$\frac{\mathbf{ }}{}$

Question 11.
Vimala and Kamala are partners, sharing profits and losses in the ratio of 4:3. Vinitha enters into the partnership and she acquires 1/14 from Vimala and 1/14 from Kamala. Find out the new profit sharing ratio and sacrificing ratio.
Answer Key:

New Profit Sharing Ratio = Old Ratio - Sacrificing Ratio

Vimala $\mathbf{=}\frac{\mathbf{4}}{\mathbf{7}}\mathbf{-}\frac{\mathbf{1}}{\mathbf{14}}\mathbf{=}\frac{\mathbf{8}\mathbf{-}\mathbf{1}}{\mathbf{14}}\mathbf{=}\frac{\mathbf{7}}{\mathbf{14}}$

Kamala $\mathbf{=}\frac{\mathbf{3}}{\mathbf{7}}\mathbf{-}\frac{\mathbf{1}}{\mathbf{14}}\mathbf{=}\frac{\mathbf{6}\mathbf{-}\mathbf{1}}{\mathbf{14}}\mathbf{=}\frac{\mathbf{5}}{\mathbf{14}}$

Vinitha $\mathbf{=}\frac{\mathbf{1}}{\mathbf{14}}\mathbf{+}\frac{\mathbf{1}}{\mathbf{14}}\mathbf{=}\frac{\mathbf{2}}{\mathbf{14}}$

New Profit Sharing Ratio = 7:5:2

Sacrificing Ratio = 1:1

 

Question 12.
Govind and Gopal are partners in a firm sharing profits in the ratio of 5 : 4. They admit Rahim as a partner. Govind surrenders 2/9 of his share in favour of Rahim. Gopal surrenders 1/9 of his share in favour of Rahim. Calculate the new profit sharing ratio and sacrificing ratio.
Answer Key:

New Profit Sharing Ratio:

Govind $\mathbf{=}\frac{\mathbf{5}}{\mathbf{9}}\mathbf{\times }\frac{\mathbf{2}}{\mathbf{9}}\mathbf{=}\frac{\mathbf{10}}{\mathbf{81}}\mathit{;} \frac{\mathbf{5}}{\mathbf{9}}\mathbf{-}\frac{\mathbf{10}}{\mathbf{81}}\mathbf{=}\frac{\mathbf{45}\mathbf{-}\mathbf{10}}{\mathbf{81}}\mathbf{=}\frac{\mathbf{35}}{\mathbf{81}}$

Gopal $\mathbf{=}\frac{\mathbf{4}}{\mathbf{9}}\mathbf{\times }\frac{\mathbf{1}}{\mathbf{9}}\mathbf{=}\frac{\mathbf{4}}{\mathbf{81}}\mathit{;} \frac{\mathbf{3}}{\mathbf{8}}\mathbf{-}\frac{\mathbf{3}}{\mathbf{64}}\mathbf{=}\frac{\mathbf{24}\mathbf{-}\mathbf{3}}{\mathbf{64}}\mathbf{=}\frac{\mathbf{21}}{\mathbf{64}}$

Rahim $\mathbf{=}\frac{\mathbf{2}}{\mathbf{9}}\mathbf{+}\frac{\mathbf{1}}{\mathbf{9}}\mathbf{=}\frac{\mathbf{3}}{\mathbf{9}}\mathbf{;} \frac{\mathbf{10}}{\mathbf{81}}\mathbf{+}\frac{\mathbf{4}}{\mathbf{81}}\mathbf{=}\frac{\mathbf{14}}{\mathbf{81}}$

New Profit Sharing Ratio:35:32:14

Sacrificing Ratio $\mathbf{=}\frac{\mathbf{10}}{\mathbf{81}}\mathbf{:}\frac{\mathbf{4}}{\mathbf{81}}\mathbf{=}\mathbf{5}\mathbf{:}\mathbf{2}$

$\mathbf{ }$

Question 13.
Prema and Chandra share profits in the ratio of 5:3. Hema is admitted as a partner. Prema surrendered 1/8 of her share and Chandra surrendered 1/8 of her share in favour of Hema. Calculate the new profit sharing ratio and sacrificing ratio.
Answer Key:

New Profit Sharing Ratio:

Prema $\mathbf{=}\frac{\mathbf{5}}{\mathbf{8}}\mathbf{\times }\frac{\mathbf{1}}{\mathbf{8}}\mathbf{=}\frac{\mathbf{5}}{\mathbf{64}}\mathit{;} \frac{\mathbf{5}}{\mathbf{8}}\mathbf{-}\frac{\mathbf{5}}{\mathbf{64}}\mathbf{=}\frac{\mathbf{40}\mathbf{-}\mathbf{5}}{\mathbf{64}}\mathbf{=}\frac{\mathbf{35}}{\mathbf{64}}$

Chandra $\mathbf{=}\frac{\mathbf{3}}{\mathbf{8}}\mathbf{\times }\frac{\mathbf{1}}{\mathbf{8}}\mathbf{=}\frac{\mathbf{3}}{\mathbf{64}}\mathit{;} \frac{\mathbf{3}}{\mathbf{8}}\mathbf{-}\frac{\mathbf{3}}{\mathbf{64}}\mathbf{=}\frac{\mathbf{24}\mathbf{-}\mathbf{3}}{\mathbf{64}}\mathbf{=}\frac{\mathbf{21}}{\mathbf{64}}$

Hema $\mathbf{=}\frac{\mathbf{5}}{\mathbf{64}}\mathbf{+}\frac{\mathbf{3}}{\mathbf{64}}\mathbf{=}\frac{\mathbf{8}}{\mathbf{64}}$

New Profit Sharing Ratio = 35:21:8

Sacrificing Ratio = 5:3

 

Question 14.
Karthik and Kannan are equal partners. They admit Kailash with 1/4 share of the profit. Kailash acquired his share from old partners in the ratio of 7:3. Calculate the new profit sharing ratio and sacrificing ratio.

Answer Key:

New Profit Sharing Ratio:

Karthik $\mathbf{=}\frac{\mathbf{1}}{\mathbf{4}}\mathbf{\times }\frac{\mathbf{7}}{\mathbf{10}}\mathbf{=}\frac{\mathbf{7}}{\mathbf{40}}\mathit{;} \frac{\mathbf{1}}{\mathbf{2}}\mathbf{-}\frac{\mathbf{7}}{\mathbf{40}}\mathbf{=}\frac{\mathbf{20}\mathbf{-}\mathbf{7}}{\mathbf{40}}\mathbf{=}\frac{\mathbf{13}}{\mathbf{40}}$

Kannan $\mathbf{=}\frac{\mathbf{1}}{\mathbf{4}}\mathbf{\times }\frac{\mathbf{3}}{\mathbf{10}}\mathbf{=}\frac{\mathbf{3}}{\mathbf{10}}\mathit{;} \frac{\mathbf{1}}{\mathbf{2}}\mathbf{-}\frac{\mathbf{3}}{\mathbf{10}}\mathbf{=}\frac{\mathbf{20}\mathbf{-}\mathbf{3}}{\mathbf{40}}\mathbf{=}\frac{\mathbf{17}}{\mathbf{40}}$

Kailash $\mathbf{=}\frac{\mathbf{1}}{\mathbf{4}}\mathbf{\times }\mathbf{10}\mathbf{=}\frac{\mathbf{10}}{\mathbf{40}}$

New Profit Sharing Ratio = 13:17:10

Sacrificing Ratio=7:3

Question 15.
Selvam and Senthil are partners sharing profit in the ratio of 2:3. Siva is admitted into the firm with 1/5 share of profit. Siva acquires equally from Selvam and Senthil. Calculate the new profit sharing ratio and sacrificing ratio.
Answer Key:

New Profit Sharing Ratio:

Siva's share $\mathbf{=}\frac{\mathbf{1}}{\mathbf{5}}\mathbf{\times }\frac{\mathbf{1}}{\mathbf{2}}\mathbf{=}\frac{\mathbf{1}}{\mathbf{10}}$

Selvam's share $\frac{\mathbf{2}}{\mathbf{5}}\mathbf{-}\frac{\mathbf{1}}{\mathbf{10}}\mathbf{=}\frac{\mathbf{4}\mathbf{-}\mathbf{1}}{\mathbf{10}}\mathbf{=}\frac{\mathbf{3}}{\mathbf{10}}$

Senthil's share $\mathbf{=}\frac{\mathbf{3}}{\mathbf{6}}\mathbf{-}\frac{\mathbf{1}}{\mathbf{10}}\mathbf{=}\frac{\mathbf{6}\mathbf{-}\mathbf{1}}{\mathbf{10}}\mathbf{=}\frac{\mathbf{5}}{\mathbf{10}}$

Siva's share $\frac{\mathbf{1}}{\mathbf{10}}\mathbf{+}\frac{\mathbf{1}}{\mathbf{10}}\mathbf{=}\frac{\mathbf{2}}{\mathbf{10}}$

New Profit Sharing Ratio = 3:5:2

Sacrificing Ratio = 1:1

 

Question 16.
Mala and Anitha are partners, sharing profits and losses in the ratio of 3 : 2. Mercy is admitted into the partnership with 1/5 share in the profits. Calculate new profit sharing ratio and sacrificing ratio.
Answer Key:

Calculate New Profit Sharing Ratio $\mathbf{=}\mathbf{1}\mathbf{-}\frac{\mathbf{1}}{\mathbf{5}}\mathbf{=}\frac{\mathbf{4}}{\mathbf{5}}$

Mala $\mathbf{=}\frac{\mathbf{3}}{\mathbf{5}}\mathbf{\times }\frac{\mathbf{4}}{\mathbf{5}}\mathbf{=}\frac{\mathbf{12}}{\mathbf{25}}$

Anitha $\mathbf{=}\frac{\mathbf{2}}{\mathbf{5}}\mathbf{\times }\frac{\mathbf{4}}{\mathbf{5}}\mathbf{=}\frac{\mathbf{8}}{\mathbf{25}}$

Mercy $\mathbf{=}\frac{\mathbf{1}}{\mathbf{5}}\mathbf{\times }\mathbf{5}\mathbf{=}\frac{\mathbf{5}}{\mathbf{24}}$

New Profit Sharing Ratio = 12:8:5

Sacrificing Ratio = Old share - New share

Mala $\mathbf{=}\frac{\mathbf{3}}{\mathbf{5}}\mathbf{-}\frac{\mathbf{12}}{\mathbf{25}}\mathbf{=}\frac{\mathbf{15}\mathbf{-}\mathbf{12}}{\mathbf{25}}\mathbf{=}\frac{\mathbf{3}}{\mathbf{25}}$

Anitha $\mathbf{=}\frac{\mathbf{2}}{\mathbf{5}}\mathbf{-}\frac{\mathbf{8}}{\mathbf{25}}\mathbf{=}\frac{\mathbf{2}}{\mathbf{25}}$ 

Sacrificing Ratio =  3:2

 

Question 17.
Ambika, Dharani, and Padma are partners in firm sharing profits in the ratio of 5:3:2. They admit Ramya for 25% profit. Calculate the new profit sharing ratio and sacrificing ratio.
Answer Key:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Question 18.
Aparna and Priya are partners who share profits and losses in the ratio of 3 : 2. Brindha joins the firm for 1/5 share of profits and brings in cash for her share of the goodwill of RS 10,000. Pass necessary journal entry for adjusting goodwill on the assumption that the fluctuating capital method is followed and the partners withdraw the entire amount of their share of goodwill.
Adjustment of goodwill
Journal Entries

 

Question 19.
Deepak, Senthil, and Santhosh are partners sharing profits and losses equally. They admit Jerald into a partnership for 1/3 share in future profits. The goodwill of the firm is valued at RS 45,000 and Jerald brought cash for his share of goodwill. The existing partners withdraw half of the amount of their share of goodwill. Pass necessary journal entries for adjusting goodwill on the assumption that the fluctuating capital method is followed.
Journal Entries

Jerald’s Share of goodwill = RS 45000 x 1/3 = RS 1,500
As the sacrifice made by the existing partners is not mentioned. It is assumed that they sacrifice in their old share profit ratio = 1 : 1 : 1.
Therefore, Sacrificing ratio = 1 : 1 : 1.

 Question 20.
Malathi and Shobana are partners sharing profits and losses in the ratio of 5 : 4. They admit Jayasri into a partnership for 1/3 share of profit. Jayasri pays cash RS 6,000 towards her share of goodwill. The new ratio is 3 : 2 : 1. Pass necessary journal entry for adjusting goodwill on the assumption that the fixed capital method is followed.
Adjusting Goodwill: Old share – New Share

 

 

 

 

 

Question 21.
Anu and Arul were partners in firm sharing profits and losses in the ratio of 4 : 1. They have decided to admit Mano into the firm for 2/5 share of profits. The goodwill of the firm on the date of admission was valued at ₹ 25,000. Mano is not able to bring in cash for his share of goodwill. Pass necessary journal entry for goodwill on the assumption that the fluctuating capital method is followed.
Answer Key:

 Question 22.
Varun and Barath are partners sharing profits and losses 5 : 4. They admit Dhamu into partnership. The new profit sharing ratio is agreed at 1 : 1 : 1. Dhamu’s share of goodwill is valued at RS 15,000 of which he pays RS 10,000 in cash. Pass necessary journal entries for adjustment of goodwill on the assumption that the fluctuating capital method is followed.
Answer Key:

 

 

 

 

 

Question 23.

Sam and Jose are partners in a firm sharing profits and losses in the ratio of 3 : 2. On 1st April 2018, they admitted Joel as a partner. On the date of Joel’s admission, goodwill appeared in the books of the firm at ₹ 30,000. By assuming fluctuating capital method, pass the necessary journal entry if the partners decide to

1.write off the entire amount of existing goodwill

2.write off RS 20,000 of the existing goodwill.

Answer Key:

 Journal Entries

(a) Write off the entire amount of existing goodwill

(b) Write off RS 20,000 of the existing goodwill

Question 24.
Raj an and Selva are partners sharing profits and losses in the ratio of 3:1. Their balance sheet as on 31st March 2017 is as under:

On 1.4.2017, they admit Ganesan as a new partner on the following arrangements:
1.Ganesan brings ₹ 10,000 as capital for 1/5 share of profit.
2.Stock and furniture are to be reduced by 10%, a reserve of 5% on debtors for doubtful debts is to be created.
3.Appreciate buildings by 20%.
Prepare revaluation account, partners’ capital account, and the balance sheet of the firm after admission.
Revaluation Account

Capital Account

Balance Sheet

Question 25.
Sundar and Suresh are partners sharing profits in the ratio of 3:2. Their balance sheet as on 1st January, 2017 was as follows:

They decided to admit Sugumar into a partnership for 1/4 share in the profits on the following terms:
1.Sugumar has to bring in ₹ 30,000 as capital. His share of goodwill is valued at RS 5,000. He could not bring cash towards goodwill.
2.That the stock is valued at RS 20, 000.
3.That the furniture is depreciated by RS 2,000.
4.That the value of the building is depreciated by 20%.
Prepare necessary ledger accounts and the balance sheet after admission.
Answer Key:
Revaluation Account

Capital Account

Balance Sheet as on 31.12.17

Question 26.
The following is the balance sheet of Janies and Justina as of 1.1.2017. They share profits and losses equally.

On the above date, Balan is admitted as a partner with a 1/5 share in future profits. Following are the terms for his admission:
1.Balan brings RS 25,000 as capital.
2.His share of goodwill is RS 10,000 and he brings cash for it.
3.The assets are to be valued as under:
Building RS 80,000; Debtors RS 18,000; Stock RS 33,000 Prepare necessary ledger accounts and the balance sheet after admission.
Answer Key:

Revaluation Account

Capital Account

Cash Account

Balance Sheet as on 01.01.2017

Question 27.
Anbu and Shankar are partners in a business sharing profits and losses in the ratio of 7 : 5. The balance sheet of the partners on 31.03.2018 is as follows:

Rajesh is admitted for 1/5 share on the following terms:
1Goodwill of the firm is valued at RS 80,000 and Rajesh brought cash RS 6,000 for his share of goodwill.
2.Rajesh is to bring RS 1,50,000 as his capital.
3.Motor car is valued at RS 2,00,000; stock at RS 3,80,000 and debtors at RS 3,50,000.
4.Anticipated claim on workmen compensation fund is RS 10,000
5.Unrecorded investment of RS 5,000 has to be brought into account.
Prepare revaluation account, capital accounts, and balance sheet after Rajesh’s admission.
Revaluation Account

Capital Account

Balance Sheet as on 31.03.2018