Average Profit Method when Past Adjustments are Made

5. Asin and
Shreyas were partners sharing profits and losses in the ratio of 2: 1. They admitted Shyam as a
partner for 1/5th share in nrofts For this purpose Goodwill Or tne nm Wàs to be valued on the basis of
threa
years purchase of last five years' average profit. Profits for the last five years ended 31st March, were
Year 2019 2020 2021 2022 2023
Profits () 1,25,000 1,00,000 1,87,500 (62,500) 1,25,000
Calculate Goodwillof the firm after adjusting the following:
25,000 for abnormal loss of goods by fire.
Pront of 2019-20 was calculated after charging
[Ans.:Goodwill 3,00,0001
6. Madhu and Vidhi are partners sharing profits in the ratio of 3 : 2. They decided to adoit Manu as a
partner from 1st April, 2023 on the following terms:
() Manuwill be given 2/5th share of the profit.
normal average profit of the f..
() Goodwillof the firm willbe valued at two years' purchase of three years
were:
Profits of the previous three years ended 31st March,
40,000).
2023-Profit 30,000 (after debiting loss of stock by fire
compensation paid? 1,10,000).
2022-Loss 80,000 (includes voluntary retirement
of 30,000 on the sale of fixed assets).
2021--Profit ? 1,10,000 (including a gain (profit) [Ans: Goodwill 1,20,01
Calculate the value of goodwill.
Jyoti's business f.
purchased Jyoti's business with effect from 1st April, 2023. Profits shown by
7. larang were:
the last three financial years ended 31st March,
gain of 12,500).
2021 :?1,00,000 (including an abnormal
loss of 25,000).
2022 1,25,000 (after charging an abnormal property-now to be insuredi
:71,12,500 (excluding 12,500 as insurance premium on firm's
the lat
years' purchase of the average profit of
2023
firm's goodwill on the basis of two
Calculate the value of [Ans: Goodwill 2,25,001)
three years. Daman fg
partners sharing profits and losses equally. They agree to admit
vears
8. Abhay, Babu and Charu are purpose, the value of goodwill is to be calculated on the basis of four
equal share of profit. For this years. These profits for the year ended 31st March, were:
five
purchase of average profit of last 2023
2021 2022
2019 2020
Year 7,10,000 (S,90,000)
3,50,000 5,00,000
Profits/Loss ) 1,50,000
Expenses Accoun, on
1,00,000 was purchased and debited to Travelling Investments is crett
?
On 1st April, 2022, a car for charged @25% p.a. Interest of 10,000 on Non-trade
which depreciation is to be
for the year ended 31st March, 2022 and 2023. [Ans.: Goodwill-940,0!
toIncome
adjusting the above.
Calculate the value of goodwillafter the ratio of 3:2. They admit Kanika i
and losses in
are partners sharing profits goodwill in this purys
cash. Goodwill for Profits
9. Bhaskar and Pillai profit. Kanika brings her share of years.
ofthe
partnership for 1/4th share in profit of past three
calculated at two years' purchase of the average normal
is to be
31st March, were:
last three years ended
on sale of assets 5,000).
2021--Profit ? 50,000 (including profit and

by fire 30,000). investments

2022--Loss20,000 (including loss interest on
(including insurance claim received 18,000 and
2023-Profit ? 70,000
Dividend received 8,000). Goodwil
goodwill brought by Kanika. ie,
Das
Also, calculate 16.500
Calculate the value of goodwill.
Goodwill 66,000; Kanika shall bring 1/4th of 66,000,
[Ans.:
 10. Sumit purchased Amit's business on 1st April, 2023. Goodwill was decided to be valued at two years'
purchase of average normal profit of last four
years. The profits for the past four years were:
Year Ended 31st March, 2020 31st March, 2021 31st March, 2022 31st March, 2023
Profits () 80,000 1,45,000 1,60,000 2,00,000

Books of Account revealed that:

i) Abnormal losS of 20,000 was debited to Profit and Loss Account for the year ended 31st March, 2020.
() Afixed asset was sold in the year ended 31st March, 2021 and gain (profit) of ? 25,000 was credited
to Profit & Loss Account.
i) In the year ended 31st March, 2022 assets of the firm were not insured due to oversight. Insurance
premium not paid was ? 15,000.
Calculate the value of goodwill. [Ans.: Goodwill- 2,82,500.]

Weighted Average Profit Method

11 Profts of afirm for the year ended 31st March for the last five years were:
31st March, 2019 31st March, 2020 31st March, 2021 31st March, 2022 31st March, 2023
Year Ended
20,000 24,000 30,000 25,000 18,000
Profits ()
Average Profit after
Calculate value of goodwill on the basis of three years' purchase of Weighted
years ended 31st March, 2019, 2020,
assigning weights 1, 2, 3, 4 and 5 respectively to the profits for [Ans.: Goodwill 69,600.]
2021, 2022 and 2023.
they have
profits in the ratio of 60:40 and for the last four years
12, Raman and Daman are partners sharing shown the
40,000 respectively. The annual accounts have
been getting annual salaries of ?50,000 and{
salaries:
following net profit before charging partners' 1,30,000.
2022 1,01,000 and 2023
Year ended 31st March, 2021--* 1,40,000; salary).
Zeenu is admitted to the partnership for 1/4th share in profit (without any
On 1st April, 2023, average profit of last three years (after
years' purchase of weighted
Goodwill is to be valued at four greatest weight being given to the last
year.
weighted as 1, 2 and 3, the
partners' salaries); Profits to be [Ans.: Goodwill 1,28,000.]
Calculate the value of Goodwill.

Super Profit Method Annual

10,00,000 and the market rate of interest is 15%.
of Anuj and Benuis years were 3,00,000, 3,60,000
and
13. The capital of the firm profit for the last three
60,000 each. The years' purchase of last three
years
salary to the partners is to be valued on the basis of two (CBSE 2019)
?4,20,000. Goodwill of the firm is of the firm.
Calculate the goodwill [Ans.: Goodwill 1,80,000.]
average super profit.
50,000. On an average, the profits were
invested ? purchase
and Bipul had a firm in which they had Goodwill is to be valued at four years'
14. Atul industry is 15%. goodwill.
The normal rate of return in the Calculate the value of
? 16,000. the money invested. [Ans.: Goodwill- 34,000.]
profits in excess of profits @15% on
of 15%.
1,00,000 and the market rate of interest is
Megha is be valued at
capital of thefrmn of Sakshi, Mehak and30,000;?36,000 and 42,000. Goodwill is to (Delhi 2017 C)
15. Total were ?
the last 3 years goodwill of the firm.
The net profits for years' super profit.
Calculate the [Ans.: Goodwill- 42,000.]
of the last 3
< years' purchase
 and valuation2.31
Capitalisation Method
om the following information,
calculate value of goodwill of the firm by applying
Total Capital of the firm ? 16,00,000. Capitalisation Method:
Normal rate of return 10%.
Profit for the year ? 2,00,000.
firm earned average profit of{ [Ans: Goodwill4,00,000.]
25. A 3,00,000
1cO The assets of the business were during the last few years. The normal rate of
17,00,000 and its liabilities were ? 2,00,000. return of the industry
Calculate the goodwill of the firm by capitalisation of average
profit. (CBSE 2019)
Aand B were partners in a firm with [Ans.: Goodwill5,00,000.]
af return was 20% and the
capitals of 3,00,000 and 2,00,000
respectively. The normal rate
capitalised value of average profits was 7,50,000. Calculate goodwill of the
frm by capitalisation of average profits method.
(CBSE 2020 )
THint: Goodwill = Capitalised Value of Average Profit - Capital [Ans.: Goodwill 2,50,000.]
Puneet and Tarun are in restaurant business having credit
Employed.]
27. balances in their fixed
F).50,000 each. They have credit balances in their Current Accounts of 30,000 and Capital Accounts as
The firm does not have any liability. They are regularly earning profits and 20,000 respectively.
5vears is 1,00,000. If the normal rate of return is 10%, find the their average profit of last
value of goodwill by Capitalisation of
Average Profit Method.
[Ans.: Goodwill 4,50,000.1]
28. From the following particulars,calculate value of goodwill of a firm by Capitalisation of Average Profit Method:
() Profits of last five consecutive years ending 31st March, are:
2023 54,000; 2022-42,000; 2021-39,000; 202067,000 and 2019759,00.
(ii) Capitalisation rate 20%.
(ii) Net assets of the firm 2,00,000. [Ans.: Goodwill61,000.]
29. Abusiness has earned average profit of 4,00,000 during the last few years and the normal rate of return
in similar business is 10%. Find value of goodwillby:
() Capitalisation of Super Profit Method, and
(i) Super Profit Method if the goodwillisvalued at 3years' purchase of super profits.
Assets of the business were 40,00,000 and its external liabilities 7,20,000. (Delhi2013 O)
[Ans.: () Goodwill 7,20,000; (ii) GoodwillR2,16,000.]
30. A firm earns profit of? 5,00,000. Normal Rate of Return in a similar type of business is 10%. The
value of total assets (excluding goodwill) and total outsiders' liabilities as on the date of goodwill are
*55,00,000 and 14,00,000 respectively. Calculate value of goodwill according to Capitalisation of Super
Profit Method as well as Capitalisation of Average Profit Method.
[Ans.: Goodwill9,00,000 in both cases.]

stock of? 20,000. The current liabilities were

Sl. On 1st April, 2018, a firm had assets of 1,00,000 excluding
Accounts. If the normal rate of return is 8%, the
( 10,000 and the balance constituted Partners' Capital actual profits
profit, find the
G0odwill of the firm is valued of 60,000 at four years' purchase of super (CBSE Sample Paper 2018)
of the firm. 23,800.]
(Ans.:Capital Employed 1,10,000; NormalProfit- 8800; Average Actual Profit
Normal Profit).]
lHint: 60,000 (Goodwill) = 4(Average Actual Profit -
-apitalisation of Super Profit
few years is ? 1,50,000. In similar business, the normal rate of
2. profit of a firm during the last
Average
Teurn is 10% of the capital employed.
Calculate the value of goodwill by capitalisation of super profit
(CBSE 2020 )
nethod if super profits of the firm are 50,000. [Ans.: Goodwill 5,00,000.]
 33. Raja Brothers earn an average pront of 30,000 with a capital of ? 2,00,000. The normal rate of
In the business is 10%, Using capitalisation of super profit method, workout the value of the
of the firm. retum
goodwi
[Ans.: Goodwill
34. Rajan and Rajani are partners in a firm. Their capitals were Rajan 3,00,000; Rajani 2,00.000
(NCERT)
1,00,000

of During
the year ended 31st March, 2023, the firm earned a profit of ? 1,50,000. Calculate the value
OT the hrm by capitalisation of super profit assuming that the normal rate of return is 20%. goodi l
(NCERT, Modified
[Ans.: Goodwill2,50,000)
35. Average profit of GS &Co. is 50,000 per year. Average capital employed in the business is
r the normal rate of return on capital employed is 10%, calculate goodwill of the firm by:
() Super Profit Method at three years' purchase; and {3,00,000.
(i) Capitalisation of Super Profit Method. [Ans.: Goodwill-(i)2 60,000; (i) *
36. A business has earned average profit of 8,00,000 during the last few years and the
return in similar business is 10%. Find value of goodwill by:
normal rate 2,00,00,
() Capitalisation of Super Profit Method; and
(ii) Super Profit Method if the goodwillis valued at 3 years' purchase of super profit.
Assets of the business were80,00,000 and its external liabilities ? 14,40,000.
JAns.: Goodwill-() 14,40,000; (ii) ?4,32,0001
37. From the following information, calculate value of goodwill of
the firm:
(i) At three years' purchase of Average Profit.
(ii) At three years' purchase of Super Profit.
(iii) On the basis of Capitalisation of Super Profit.
(iv) On the basis of Capitalisation of Average Profit.
Information:
(a) Average Capital Employed is 6,00,000.
(b) Net Profit/(LOss)of the firm for the last
three years ended are:
31st March, 20232,00,000, 31st March,
(c) Normal Rate of Return in 20221,80,000, and 31st March, 20211,60,000.
similar business is 10%.
(d) Remuneration of 1,00,000 to
partners is to be taken as charge against profit.
(e) Assets of the firm (excluding
Partners Capital is? 6,00,000goodwill,
and
fictitious assets and non-trade investments) is 7,00,000 wheres
Outside Liabilities1,00,000.
(Ans.: Goodwill-) 2,40,000; (i) 60,000: (ii)
2,00,000; (iv) ? 2,0000
 AccOunting of Goodwill
Nisha and Disha shared profits and losses in the ratio of 3:
6. Asha, 2023, 2:1
1st April, they agreed to share profits equally. The
asce necessary Journal entries to record the above change.
goodwill of the firm wasrespectively.
With effect
valued at 18,000.from
[Ans.: Dr. Disha's Capital A/c and Cr.
/ and Z are partners sharing profits and losses in the ratio of Asha's Capital A/c by
5:3:2. 3,000.1]
toshare profits and losses equally. The Partnership Deed provides that From 1st April, 2023,
they
any changedecided
profit-sharing ratio, goodwill is to be valued at two years' in the event of
purchase of the
average in the
five years. The profits and losses of the preceding years ended 31st March, are:
profit of the
preceding
2019 2020
Year 2021 2022 2023
Profits () 70,000 75,000 55,000 35,000
Calrulate the value of goodwill and pass Journal entry. 10,000 (Loss)
[Ans.: Goodwill =?90,000; Dr. Y's Capital A/c
by 3,000 and
Z's Capital A/c by 12,000; Cr. X's
mlaxman and Bharat who were sharing profits and losses in the ratio of Capital A/c by 15.000.1
ormfts and losses equally with effect from 1st April, 2023. Goodwill of the 5: 3:2, decide to share
firm is valued at F 4 50 000
Goodwill is appearing in the books is at 75,000.
Pass necessary Journal entries to record the above change.
[Ans.: For Goodwill Written off-Dr. Ram's Capital A/c by
37,500; Laxman's Capital A/c by 22,500:
Bharat's Capital A/c by 15,000 and Cr. Goodwill A/c by 75,000.
For Adjustment of Goodwill-Dr. Laxman's Capital A/c by R 15,000;
Bharat's Capital A/c by 60,000
and Cr. Ram's Capital A/c by
75,000.]
9. Aand Bare partners in a firm sharing profits in the ratio of 2: 1. They
decided that with effect from
1st April, 2022, they would share profits in the ratio of 3 : 2. But, this decision
was taken after the profit
for the year ended 31st March, 2023 of 90,000 was distributed in the old
profit-sharing ratio.
Firm's goodwill was valued on the basis of aggregate of two years' profits preceding the date
became effective. decision
Pronts for the years ended 31st March, 2021 and 2022 were 60,000 and 75,000 respectively. Capital
HCCOunts of the partners as at 31st March, 2023 stood at 1,50,000 for A and 90,000 for B.
rass necessary Journal entries and prepare Partners' Capital Accounts.
[Ans.: Value of Goodwill 135,000; A's sacrifice-1/15 and B's Gain-1/15;
For Adjustment of Profit: Dr. As Capital A/c and Cr. B's Capital Alc by *6,000.
ForAdjustment of Goodwill: Dr. B's Capital A/c and Cr. A's Capital A/c by *9,000.
Balances of: A's Capital A/c-1,53,000; B's Capital A/c-87,000.]
 Calculation of New Proft-sharing Ratio on the basis of Adjustment of Goodwill
13. Naman, Aman and Raman are partners sharing profits and losses in the ratio of 2: 2:1. From 1st A
2023, they decide to change the profit-sharing ratio. They pass the following 1st April,
in the books: adjustment entry for goorwi
JOURNAL
Date Particulars LLF. Dr. ()
2023 Cr.)
April 1
Naman's Current A/c 2,00,000 x 3/25)
...Dr. 24.000
Raman's Current A/c 2,00,000 x 2/25) ...Dr.
To Aman's Current A/c 2,00,000 x 5/25) 16,000
(Goodwilladjusted on change in profit-sharing ratio) 40,00
What will be the new profit-sharing ratio of
partners assuming capital of partners are fixed?
[Hint: New Profit Share = Old Profit [Ans.: New Profit-sharing
Share - Sacrificed Profit Share + Share
New Share of: Naman = 2/5 + 3/25 = Gained
Ratio-13:5:7)
13/25; Aman = 2/5 - 1/5 = 1/5 or 5/25:
= 7/25. Raman = 1/5 + 2/25
Aman is sacrificing partner and
Naman and Raman are gaining
partners.]
 Accounting of Reserves, ACCumuated Profits and Losses
14. Nitya and Anand are partners in afirm sharing profits and losses equally. With effect from 1st April, 2023, they
ded to share future profits in the ratio of
3:2. On the date of change in the
&Loss Account
had a credit
balance of 1,50,000. Pass the profit-sharing ratio, the Profit
balance in the Proft &Loss Account before the necessary Journal entry for the distribution of the
change in the profit- -sharing ratio.
[Ans.: Dr. Profit & Loss A/c by 1.50,000; Cr. Nitya's
Capital A/c by 75,000 and
Anand's Capital A/c by 75,000.
15. Om and Shiv are partners in afrm sharing profits in the ratio of 4:1.They decided to share future profits
of 3:2 w.e.f. 1st April, 2023. On
in the rratio that day. Profit & Loss Account showed a debit
F 1,00,000. Pass Journal entry to give effect to the above. balance of
TAns.:Dr. Om's Capital AVCby * 80,000 and Shiv's Capital A/C by
20,000; Cr. Profit &Loss Ac by? 1,00,000.]
16. A, 8 and C who are presently sharing profits and losses in the ratio of 5:3:2 decide to share future
profits and losSses in the ratio of 2:3:5. Give the Journal entry to
Reserve' of 1,20,000 at the time of change in
distribute'Workmen Compensation
() no other information is given;
profit-sharing ratio, when:
(ii) there is no claim against it.
[Ans.: In both Cases: Dr. Workmen Compensation Reserve A/c by ? 1,20,000;
Cr. A's Capital A/c by 60,000; B's Capital A/c by 36,000and C's
Capital A/c by 24,000.]
17. X, Yand. Zwho were sharing profits and losses in the ratio of 5:3:2 decided to share future profits in the
of 2 3:5. Give the Journal entry to distribute Workmen Compensation Reserve' of
1,20,000 at
the time of change in profit-sharing ratio, when there is a claim of 80,000 against it.
[Ans: Dr. Workmen Compensation Reserve A/c by 1,20,000; Cr. X's Capital A/c by 20,000;
Ys Capital A/cby t 12,000; Zs Capital A/c by 8,000 and Workmen Compensation Claim A/c by 80,000.]
40 Achok. Bhim and Chetan who were sharing profits in the ratio of 5:3:2, decided to share profits in the
atio of 2:3:5 with effect from 1st April, 2023. Workmen Compensation Reserve existed at 1,20,000
in the Balance Sheet as at 31st March, 2023 and Workmen Compensation Claim of ? 1,50,000 exists.
Pass Journal entries for the accounting treatment of WNorkmen Compensation Reserve.
[Ans.: (a) Dr. Workmen Compensation Reserve A/c by 1,20,000
and Revaluation A/c by 30,000; Cr. Workmen Compensation Claim A/c by ? 1,50,000.
(b) Dr. Ashoks Capital A/c by? 15,000; Bhim's Capital A/c by?9,000
and Chetan's Capital A/c by 6,000; Cr. Revaluation A/c by? 30,000.]
19. A, Band C who are sharing profits and losses in the ratio of
5:3:2 decide to share future
"Investments Fluctuation
profits in the ratio of 2:3:5. Give the Journal entry to distribute
ratio, when investment (market value
Reserve' of 20,000 at the time of change in profit-sharing
?95,000) appears in the books at 1,00,000.
20,000; Cr. A's Capital A/c by 7,500;
[Ans.: Dr. Investments Fluctuation Reserve A/c by
3,000 and Investment A/c by ? 5,000.]
B's Capital Alc by 4500; C's Capital A/c by of
Amar are partners sharing profits equally and decide to share profits in the ratio
, larun and Sheet as at 31st March, 2023 is as follows:
2023. The extract of their Balance
We. 1st April,
Liabilities Assets
4,00,000
Ivestments Fluctuation Reserve 60,000 Investments (At cost)
Pas the Journal entries in each of the following situations:
4,00,000;
U When its Market Value is not given; (ii) When its Market Value is
is 3,70,000;
(i) When its Market Value is 4,24,000; (iv) When its Market Value
(v) When its
Market Value is 3,10,000.
Revaluationof and Reassessment of Liabilities
ofAssets and
and Amit are partners sharing profits and losses equally. The Balance Sheet as at
Ashish, Aakash follows:
25.
21st March, 2023 was as
Assets
liabilities 84,000
1,35,000 Cash in Hand
SundryCreditors 90,000 Cash at Bank 1,40,000
GeneralReserve Sundry Debtors 80,000
CapitalA/cs: 1,40,000
3.00,000 Stock
4,00,000
Ashish 3,00,000 Land and Building
2,50,000
Aakash 2.75.000 8,75,000 Machinery 6,000
Amit Advertisement Suspense
11,00,000
11,00,000

2:2 :1 w.e.f. 1st April, 2023.They also decided that:

share profits in the ratio of
The partners decided to
reduced to1,25,000.
() Value of stock to be 10%.
Value of machinery to be decreased by
(ii)
Building to be appreciated by 62,000.
(i) Land and @ 5% on Sundry Debtors.
Debts to be made
(iv) Provision for Doubtful reconstitution of the firm at a remuneration of 10,000.
out
(v) Aakash was to carry
Journal entries to give effect to the above. [Ans.: Revaluation Profit-8,000.]
Pass necessary
and losses in the ratio of 5:3:2. From
profits
in afirm sharing losses in the ratio of 2 :5 :3. Their Balance
Sheet
Uma are partners
26. Hari, Kunal and decided to share future profits and balance of 15,000 in Investment
1st April, 2018 they and a
75,000 in the Profit & Loss Account
Showed a balance of it was agreed
that:
Fluctuation Fund. For this purpose,
Goodwill of the firm was valued at3,00,000. were valued at35,000.
) value of 50,000)
(havinga book depreciated by 10%.
0) That investments value of 50,000 be (CBSE 2019)
book
() That stock havinga for the above in the books of the firm. Hari's Capital A/cby 37,500;
Journal entries A/c by 75,000; Cr. Uma's Capital A/c by 15,000.
rass the necessary [Ans.: () Dr. Profit & Loss
22,500: and
Kunal's Capital A/cby and Cr. Investments A/c by 15,000.
Investment Fluctuation Fund A/c and Cr. Stock Acby 5,000.
(ü)Dr. A/c
(i) Dr. Revaluation Hari's Capital A/cby 2,500;
Loss; Dr.
(iv) For Revaluation
1,500 and
1,000;
Uma's Capital A/c by 5,000.
Kunal's Capital A/cby A/c by
Cr. Revaluation 60,000and
Dr. Kunal's Capital A/cby
(v) For Goodwill:
Cr. Hari's CapitalAcby 90,000.]
30,000:
Uma's Capital A/cby
 decided to
27. A, 8 and Care sharing profits and losses in the ratio of 2: 2:1. They share
1st April, 2023 in the ratio of 5:3:2.They also decided not to change the values of
in the books of account. The book values and revised values of asset and liabilitiesassets
as onand
proft wef
change were as follows:
the
liabil tie
Book Values ) Revised Values ()
Machinery 2,50,000 3,00,000
Computers 2,00,000 1,75,000
Sundry Creditors 90,000 75,000
Outstanding Expenses 15,000 25,000
Pass an adjustment entry. [Ans.: Dr. A's Capital A/c and Cr. B's
28. Capital A/c
Ajeet, Vijeet and Sujeet are partners in afirm sharing profits and losses in the ratio of 5: by? 3,0001
to share profits and losses in the ratio of 2: 5:3 with effect from 1st April,
value of 1,00,000) was found undervalued by 2,50,000 and stock (having book
was found overvalued by 3,00,000.
:3:2.(Thheyaving decibokda
2023. Land
value of
Pass the necessary adjusting entry without affecting the existing book value. 4,00,00)
[Ans.: Dr. Ajeet's Capital A/c by ? 15,000; Cr. Vijeet's
Capital A/c by 10 000.
29. Rajesh and Mahesh are partners in a
firm sharing
Sujeet's Capital A/c by 5,001
31st March, 2023 was as profit in the ratio of 3:2. Their Balance Sheet ,
follows:
Liabilities
Assets
Rajesh's Capital A/c 54,000 Cash
Mahesh's Capital A/c
Creditors 36,000| Machinery 18,000
36,000 | Building 36,00
1,26,000 72,000
Goodwill of the firm is valued 1,26,000
decide to share profits equallyat36,000
with
and the building
at90,000 on 31st March, 2023. The partners
Pass the necessary effect from 1st April, 2023.
accounting entries
[Ans.: (a) For Adjustment of without affecting the existing figure of building.
Goodwill: Dr. Mahesh's Capital A/cand Cr.
(b) For
Appreciation in Value of Building:Rajesh's Capital A/c by? 3,60;
Dr. Mahesh's Capital Alc and
[Hint: Rajesh's sacrifice = Old Cr.
Profit Share - New Profit Rajesh'=s Capital A/c by 1,800 (1/10 of 18,000)
Mahesh's gain = New Profit Share - Old Share 3/5 - 1/2=
Profit Share = 1/2 - 2/5 = 1/10
Preparation of Balance Sheet 1/10.]
30. A, Band C were
31st March, 2015 partners in a firm
was as follows: sharing profits in the ratio of
Liabilities 3:2:1,Their Balance Sheet as on
Creditors Assets
Bills Payable 50,000 Land
General Reserve 20,000 Building 50000
Capital A/cs: 30,000 Plant 50,000
1,00,000
B 1,00,000 Stock 40,000
C 50,000 Debtors 30,000
Bank
25,000 1,75,000 5,000

2,75,000 2,75,0
 Existing Partners 3.51
April, 2015, A, Band C decided
From 1st the firm to share profits equally. For this it was agreed that:
) Goodwill of will be valued at
(i) Land will be revalued at 80,000 and 1,50,000.be
building depreciated by 6%.
(i) Creditors of 6,000 were not likely to be claimed and hence should be written off.
Prepare Revaluation Account, Partners' Capital Accounts and Balance Sheet of the
reconstituted firm.
JAns.: Gain (Profit) on (Delhi 2016)
Revaluation-33,000;
B 71,000 andC
Partners' Capital Accounts: A 1,56,500;
10,500; Balance Sheet Total 3,02,000.]
31. Balance Sheet of. and Y, who share profits and losses as 5:3, as at 1st April, 2022 is:

Liabilities Assets

AsCapital 52,000 Goodwill 8,000

Y'sCapital 54,000 Machinery 38,000
GeneralReserve 4,800 Furniture 15,000
Workmen Compensation Reserve 10,000 Sundry Debtors 33,000
Employees'Provident Fund 1,000 Stock 7,000
SundryCreditors 5,000 Bank 25,000
Advertisement Suspense A/c 800
1,26,800 1,26,800

0 the above date, they decided to change their profit-sharing ratio to 3:5 and agreed upon the following:
() Goodwill be valued on the basis of two years' purchase of the average profit of the last three years.
Profts for the years ended 31st March, are: 20207500; 2021-4,000; 2022- 6,500.
Machinery and Stock be revalued at 45,000 and 8,000 respectively.
(c) Claim on account of Workmen compensation is 6,000.
Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet of the new firm.
[Ans.: Gain (Profit) on Revaluation8000; Capitals: X-* 60,000; Y-*1,26,000.]
Balance Sheet Total
S4,000;
Adjustmentof Capital
profits in the ratio of 4:3:2:1. On
32. Ram, Mohan, Sohan and Hari were partners in a firm sharing
1st April, 2016, their Balancè Sheet was as follows:
BALANCE SHEET OF RAM, MOHAN, SOHAN AND HARI as on 1st April, 2016

Liabilities Assets
Fixed Assets 9,00,000
Capital A/cs: 5,20,000
4,00,000 Current Assets
Ram
Mohan 4,50,000
Sohan 2,50,000
Hari 2,00,000 | 13,00,000
Workmen Compensation Reserve 1,20,000 14,20,000
14,20,000
this
partners decided to share the future profits in the ratio of 1:2:3:4. For
rom the above date, the following:
of the firm was valued at 1,80,000. The partners also agreed for the
Purpose the goodwill
has been estimated at 1,50,000.
Id) The caim for workmen compensation profit-sharing ratio by opening Partners'
according to new
Aajust the capitals of the partners
Current ACcounts. Balance Sheet of the reconstituted firm.
Capital Accounts and the (Delhi 2017)
pare Revaluation Account. Partners'
Capital Accounts: Ram ,27,000; Mohan2,54,000;:
Partners' (Cr);
IAns: Revaluation Loss-30.000:
Hari5,08,000. Partners' Current AcCounts:Ram-3,15,000 (Dr.);
and
Sohan-3,81,000Mohan205,000 -3,65,000
(Cr); Sohan- 1,55,000 (Dr): Hari Sheet-* 19,40,000.]
Total of Balance
 33. Suresh, Ramesh, Mahesh sharing profits in the ratio of
and Ganesh were partners in a firm
On lst April, 2016. their Balance Sheet was as follows:
2:2:3:3
GANESH
BALANCE SHEET OF SURESH. RAMESH. MAHESH AND
as on ist April, 2016
Liabilities Assets
Capital A/cs: Fixed Assets
6,00,000
Suresh 1,00,000 Current Assets 3,45,00
Ramesh 1,50,000
Mahesh 2,00,000
Ganesh 2,50,000 7,00,000
Workmen Compensation Reserve 75,000
Sundry Creditors 1,70,000
9,45,000 9,45,000

From the above date, the partners decided to share the future profits equaly. For this purpose, the
goodwill of the firm was valued at 90,000. It was also agreed that:
(a) Claim against Workmen Compensation Reserve will be estimated at 1,00,000 and fixed assets will
be depreciated by 10%.
(b) The Capitals of the partners will be adjusted according to the new profit-sharing ratio. For this,
necessary cash willbe brought or paid by the partners as the case may be.
Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet of the reconstituted firm.
(AI 2017)
[Ans.: Revaluation Loss: 85,000; Capital of each partner in the new firm-71,53,750;
TotalCapital of the new firm* 6,15,000; Cash to be brought in: Suresh* 75,250; Ramesh- 25,250:
CashWithdrawn by: Mahesh- 25,250; Ganesh-* 75,250; Total of Balance Sheet-T 885,000]
Calculation of New Proft-Sharing Ratio and Sacrificing Ratio
1. Glrja, Yatin and Zubin are partners sharing profits and losses in the ratio of 5:3:2. They admit Suresh
into parthership and give him 1/5th share of profits. Find the new profit-sharing ratio.
[Ans.: New Profit-sharing Ratio-10:6:4 :5.]
2. A and B are partners sharing profits and losses in the proportion of 7:5. They agree to
admit G, their
Amanager into
and 1/8th partnership
from B.
who is to get 1/6th share in the profits. He takes this share as 1/24th from
Calculate new profit-sharing ratio.
[Ans.: New Profit-sharingratio of A, Band C-13:7:4.]
3. A, B and Cwere partners in a firm sharing profts in the ratio of 3:2:1. They admitted Das a new
partner for 1/8th share in the profits, which he acguired 1/16th from B and 1/16th from C. Calculate the
new profit-sharing ratio of A, B, C and D. (Delhi 2016)
[Ans.: New Profit-sharing Ratio-24 : 13:5:6.]
4. Bharati and Astha were partners sharing profits in the ratio of 3: 2. They admitted Dinkar as a partner
for 1/5th share in the future profits of the firm which he got equally from Bharati and Astha. Calculate
the new profit-sharing ratio of Bharati, Astha and Dinkar. (Delhi 2016 C)
[Ans.: New Profit-sharing Ratio-5:3 : 2.]
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. [Ans.: New Profit-sharing Ratio-26: 19: 15.]
6. S, Band Jwere partners in a firm. Twas admitted as a partner in the partnership firm for 1/5th share of
profits. Calculate the sacrificing ratio of S, B and J. (CBSE 2019)
[Ans: Sacrificing Ratio ofS, B and J is 1:1:1.]
[Hint: Unless agreed otherwise,sacrificing ratio of old partners willbe the same as their old profit-sharing
ratio.]
7. PandQ were partners in a firm sharing profits in the ratio of5:3. 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
Pand Q. (CBSE 2020)
[Ans.: Sacrificing Ratio of Pand Q-3:1.]
8. Kabir and Farid are partners in a firm sharing profits and losses in the ratio of 7 :3. Kabir surrenders
2/10th from his share and Farid surrenders 1/10th from his share in favour of Jyoti; the new partner.
Calculate new profit-sharing ratio and sacrificing ratio. (CBSE Sample Paper 2015)
[Ans: New Profit-sharing Ratio-5 :2:3; Sacrificing Ratio-2: 1.]
 9. Find New Profit-sharing Ratio:
sharing profits in the ratio of 3: 2. S joins
(Ö) Rand Tare partners in a firm favour of S.
share in the firm. R
1/4th of his share and T 1/5th of his
(ii) Aand B are partners. They admit C for 1/4th
share. In future, the ratio between Aand sur enders
B would be2:1,
partners sharing profits and losses in the ratio of 3 :
A andshare
(iii) 1/5th in the profit. C acquires 1/5th of his share from Aand 4/5th share2. from
B are They B.
1/2: 1/3: 1/6. Djoins the firm as a new partner for
adrnit
Cfor
(iv) A, Band Care partners in the ratio of
in profits. C would retain his original share. 1/6th
shareQ)
B are equal partners.They admit Cand D as partners with 1/5th and 1/6th (CBSE 2020
(V) and
A
(vi) Aand Bare partners sharing profits in the
ratio of 5:3. Cis admitted for 3/10th share respectively.
share
of which was gifted by A and the remaining share was taken by C equally from A of pprofit half
[Ans.: (i) New Profit-sharing Ratio of R, Tand S-45:32:23; (ii) New Profit-sharing
Ratio of A, B
C-2:1:1; (ii) New Profit-sharing Ratio of A, Band C--14:6:5; (iv) New and
A, B, Cand D-12 : 8:5:5; (v) New Profit-sharing Ratio of A, B, C Profit-sharing
and D-19: Ratio of
(vi) New Profit-sharing Ratio of A, Band 19:12:10;
10. Mahi and Rajat were in partnership sharing profits and losses in the ratio of 4:3. They addmitted Kripa as
a new partner. Kripa brought 60,000 as her share of goodwill premium which was entirely credited to
C4:3:3)
Mahi's Capital Account. On the date of admission, goodwill of the firm was valued at4.20 000 c
the new profit-sharing ratio of Mahi, Rajat and Kripa.
IAns.: New Ratio of Mahi, Rajat and Kripa (CBSE 2020)
= 3:3:11
11, Rakesh and Suresh are sharing profits in the ratio of 4:3.Zaheer joinsand the new ratio among Rakesh.
Suresh and Zaheer is 7:4:3. Find out the sacrificing ratio. [Ans.: Sacrificing Ratio--1:21
12. Karim and Rehman are partners sharing profits in the ratio of 32. :Find
2. Naval is admitted as apartner. New
the sacrificing ratio.
profit-sharing ratio among Karim, Rehman and Naval is 4:3:
[Ans.: Sacrificing Ratio--7:3]
for 1/3rd share in future
13. A, B and C are partners sharing profits in the ratio of 4: 3:2. D is admitted
profits. What is the sacrificing ratio? (Ans.: Sacrificing Ratio--4:3:2]
ratio of 3:2. They admit Asma into
14. Gautam and Yashica are partners sharing profits and losses in the from his share to Asma. Calculate
partnership. Gautam gives 1/3rd of his share while Yashica gives 1/10th
new profit-sharing ratio and sacrificing ratio.
[Ans.: New Profit-sharing Ratio--4:3:3; Sacrificing Ratio-2:1]
B and Care partners sharing profits in the ratio of 2: 2:1. D is admitted as anew partner for
15. A,
Calculate the new profit-sharing ratio and sacrificing ratio.
1/6th share. C will retain his original share. Ratio-1:1]
[Ans.: New Profit-sharing Ratio-19: 19: 12: 10; Sacrifñcing
ratio. So,
When the sacrifice of partners is not given, then sacrificing ratio is same as the old
[Hint:
Sacrificing Ratio of Aand B = 2:2 or 1:1]
in partnership sharing profits and losses in the ratio of 36 : 24 : 20: 20 respectively.
16. A, B, Cand D are themseves
partnership for 20% share and A, B,Cand D in future would share profits among
Ejoins the profit-sharing ratio after E's admission.
as 3/10:4/10: 2/10: 1/10. Calculate new Ratio of A, B, CD andE-6:8:4:2:5
[Ans.: New Profit-sharing
partnership who
of 3: 2. They admit Chintan into
17. Amit and Vidya are partners sharing profits in the ratioshare from Vidya. Calculate New
Profit-sharing nau
of his share from Amit and 4/25th
acquires 1/5th Chintan-14:6:5
and Sacrificing Ratio. Vidya and
[Ans.: New Profit-sharing Ratio of Amit, and Vidya--1:4!of
SacrificingRatio of Amit 1 -1/5)
4/5th (i.e.,
he acquires
[Hint: Since Chintan acquires 1/5th of his share from Amit, it means
his share from Vidya.
if 4/5 of Chintan's share = 4/25 (Received from Vidya)
Chintan's share = 4/25 × 5/4 = 1/5
from Vidya = 4/25.]
Share acquired by Chintan: from Amit = 1/5 x 1/5 = 1/25;
 Chapter 4. Admission of aPartner 4.99
Admission of a Partner and
podwilPremiumfor
Treatment of Goodwill
Goodwill is brought in Cash by the New Partner and
in
the
BuSiness Retained
partners
sharing profits and losses in the ratio of 2: 5.
Silver are They admit Gold
Copper
and
conditionthathe will hring ? 14,000 as his share of goodwill to be distributed
Gold
between and onSilver.
the
I8 Coopersshhareinthe future profits or losses will be 1/4th. What will be the new profit-sharing ratio and
amountof goodwill brought in by Copper will be received by Gold and Silver?
what [Ans.: Gold will get ? 4,000; Silver will get 10,000; New Profit-sharing Ratio-6: 15:7.]

and Nirmal
are partners in a firmsharing profits and losses in the ratio of 3: 2. Anew partner
Vimal admitted. Vimal gives 1/5th of his share and Nirmal gives 2/5th of his share in favour of Kailash.
12 is
KailashpurpOse of Kailash's admission, goodwill of the firm is valued at75.000 and Kailash brings his
ofgOodwillin cash which is retained in the business. Journalise the above transactions.
the
share
Ratio-12:6:7: Sacrificing Ratio-3:4; Kailash's Share of GoodwillL21,000R 75,000 >x 7/25);
New
JAns.: () Dr. Bank A/c and Cr. Premium for GOodwill A/c by 21,000: (ii) Dr. Premium tor
Goodwill A/c by 21,000; Cr. Vimal's Capital A/c by 9,000 and Nirmal's Capital A/c by? 12,000.]
Journal entries to record the following arrangements in the books of the firm:
Pass
10.
and Care
partners sharing profits in the ratio of3:2. Dis admitted paying a premium (goodwil)
(a) B
of 2,000for 1/4th share of the profits, shares of Band Cremain as before.
Band Care partners sharing profits in
the ratio of3:2. Dis admitted paying a premium of? 2,100
b) share of profits which he acquires 1/6th from Band 1/12th from C.
for1/4th
Care in partnership sharing
profits and losses as 3:1. They admit Das partner in the firm, Dpays
Band
21,
premium of 15,000
for 1/3rd share of the profits. As between themselves, Band Cagree to share future
Draft Journal entries showing appropriations of the premium money.
profitsandlosses equally.
[Ans.: Dr. Premium for Goodwill A/c by 15,000 and Cs Capital A/c by 3,750;
Cr. B's Capital A/c by? 18,750.]
partners in afirm sharing profits in the ratio of 3:2. They admit Anita as a new partner.
Geetaand Sunita are
between Geeta, Sunita and Anita will be 5:3:2. Anita brought in 25,000
The new profit-sharing ratio necessary Journal entries for the treatment of
goodwill.
premium for goodwill. Pass
for her share of
Geeta and Sunita equally.]
IHint: Goodwill will be shared by ratio of5:3. C is admitted as apartner who
profits and losses in the
3, Aand Bare in partnership sharing for the firm.
necessary amount of goodwill which is valued at 60,000
pays 40,000as capital and the which he takes 1/10th from Aand 1/10th from B.
His share of profits will be 1/5th partners.
future profit-sharing ratio of the
Pass Journal entries and also calculate [Ans.: New Proft-sharing
Ratio-21:11: 8.]
their Manager,
profits and losses in the ratio of7:5. They admit Cris, capital and
sharing his
AOlland Bhavya are partners 1/6th share in the business. Cris brings 1,00,000for from Bhavya.
no partnership who is to get goodwill which he acquires 1/24th from Adil and 1/8thentries for Cris's
0,000for the 1/6th share of was ? 240,000. Pass necessary Journal
Proft for the first year of the new partnership
GOmission and apportion the profit between the
partners.
1,30,000; Bhavya--* 70,000; Cris-- 40,000.]
Adil-*
[Ans.: Share ofProfit: 3:2. They admit Cinto
partnership
in the ratio of admission of C,
25. Aand B partners in afirm sharing profits and losses goodwill. At the time of
are as
for 1/5th share. C brings ? 30,000 as capital and 10,000 3,000. New profit-sharing ratio of the partners
Sheet of Aand Bat
goodwi l CPpeared in the Balance
wil be 5:3::2. Pass necessary Journal entries. Cr. Goodwill A/c by 3,000.
A/c by 1,200;
[Ans.: (0) Dr. A's Capital Ac by
1,800 and B's Capital Premium for Goodwill A/c by 10,000.
30,000 and
) Dr. Bank Ac by *40,000; Cr. C's Capital A/c by As Capital A/c and B's Capital A/c by? 5,000
10,000; Cr. Ratio--1:1.]
) Or, Premium for Goodwill Acby each in their Sacrificing
 oubie tntry Book Keeping-CBSE XII
26. Anu and |Bhagwan were partners in a firm sharing profits in the ratio of 3:1. Goodwill ar
appeared in the
books at R4,40,000. Raja was ad1mitted to the partnership. New profit-sharing ratio among Anu,
and Raja was 2:2:1.
Raja brought 1,00,000for his capital and necessaty cashfor his goodwill premium. Bhaywan
Goodwil of the
was valued at 2,50,000.
Record necessary Journal entries in the books of the firm for the above transactione
firn
[Ans.: () Dr. Anu's Capital A/c by 3,30, 000 and Bhagwan's Capital A/cc (A 2015 Q
Cr. Goodwill A/c by4,40,000; (ii) Dr. Bank A/c by 1,50,000; Cr. Raja's Capital A/c byby? 1,10,00;
y
and Premium for Goodwill A/c by ? 50,000; (i) Dr. Bhagwan's Capital A/c by
Premium for Goodwill A/c by 50,000; Cr. Anu's Capital A/c t 37,51,0000,0and00
by ?
Premium for Goodwillbrought in Kind 87,500,)
27. Ram and Mohan are partners in afirm sharing profits in the ratio of 3:2. On 1st April, 2022,
Sohan as a partner for 1/4th share in the profits. Sohan contributed following assets towardsthey admit
and for his share of goodwill: his capital
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 if:
() Partners do not withdraw the share of goodwill.
(i) Partners withdraw half of their share of goodwill.
JAns.: () GoodwillBrought by Sohan-* 1,50,000 and
Capital13000.
Share in Goodwill: Ram*90,000; Mohan--60.00
(ii) Goodwill withdrawn: Ram- 45,000; Mohan
30.001
When Premium for Goodwill is brought in by New or Incoming Partner and is withdrawn by
Old Partners Fully or Partly
28. Aand Bare partners in a business sharing profits and losses in the ratio of 1/3rd and
2/3rd. On 1st Anri
2022, their capitals were 8,000 and ? 10,000 respectively. On that date, they admit C in
partnershio
and give him 1/4th share in the future profits. C brings 8,000 as his capital and 6,000 as
goodwil.
The amount of goodwill is withdrawn by the old partners in cash. Pass the Journal entries and
show
the Capital Accounts of all the Partners. Calculate proportion in which partners
would share profits and
losses in future. [Ans.: New Ratio-1:2: 1; Capital A/cs: A 8,000; B 10,000; C- 8,00)
29. Aand B were partners in a firm sharing profits and losses in the ratio of 3:
2.They admitted Cas anew
partner for 3/7th share in the profit and the new profit-sharing ratio will be 2:2:3. Cbrought ? 2,00,000
as his capital and? 1,50,000 as premium for goodwill. Half of their
share of premium was withdrawn
by Aand B from the firm. Calculate sacrificing ratio and pass
necessary Journal entries for the above
transactions in the books of the firm. (Delhi 2009 0
[Ans.: Sacrificing Ratio-11:4]
When Only Part of Premium for Goodwill is brought by New
Partner in Cash
30. A and Bare partners sharing profits in the ratio of 2:1. They admit Cfor
1/4th share in profits. CDg
in ? 30,000for his capital and 8,000 out of his share of 10.000 for
goodwill. Before admission, good
existed in the books at 18,000. Pass Journal entries to aive effect to the
above arrangement.
[Ans.: () Dr. A's Capital A/c by? 12,000 and B's Capital A/c by 6,000; Cr. Goodwill A/c byy 1800
(i) Dr. Bank A/c by? 38,000; Cr. C's Capital A/c by 30,000 and Premium for Goodwill A/C by 800
(ii) Dr. Premium for Goodwill A/c by ? 8,000 and Cs Current Ac by? 200
R3333)
Cr. As Capital Ac by 6,667 and B's Capital|A/c by
 LAndBarepartnerssharing profits and losses in the ratio of 3:2. They admitC as partner in the hrm
in profits which he takes 1/6th
orl/4th
share from Aand 1/12thPassfrom
irmsgoodwil!Goodwill of the ffrm was valued at 1,00,000. B. Cbrings
necessary Journal
60%entries
of his to record share of
Phisartangement.
[Ans.: (i) Dr. Bank Alc and Cr.
Premiumfor Goodwill Alc by 15,000; Cr. A's Capital A/c by Premium
10,000
for Goodwill Alc by {
and 15,000.
B's Capital
(ii) Dr. C's Current A/c by A/c
D.
10,000; Cr. A's Capital A/c by 6,667 and B's by 5,000.
henNeworIncoming Partner is not able to bring his Share of Premium for Goodwill Capital A/c by 3,333.)
theadmissionofRao, goodwill of Murty and
Shah is valued at 30,000. Rao is to get
Previously Murty and Shah shared profits in the
ratio of 3:2. Rao is unable to 1/4th share of
bring
goodwilt!Give
Journal entries in the books of Murty and
Shah when: (a) Goodwill does not amountexist in
of
the
in
(b) Goodwill exists the books at 10,000.
books;and
Ans.:(a)Dr Rao's CurrenttA/cby? 7,500; Cr. Murtys Capital Alc by
4,500 and Shah's Capital A/c by 3,000.
Dr. Murty's Capital. A/c by? 6,000 and Shah's Cäpital A/c by 4,000; Cr. Goodwil A/c by 10,000.
) Dr.RaosCurrent A/c by 7,500; Cr. Murty's Capital A/c by 4,500 and Shah's Capital A/c by 3,000.]
einpartnership shaaring
4BandCare profits in the ratio of 5:4:1.Two new partners Dand Eare
andthenew profit-sharing ratio is53:4:2:2:1.D is to pay90,000 for his share of Goodwilladmitted
but Eis
Unableto bring his share of Goodwill. Both the new partners introduced 1,20,000 each as their capital.
required to pass necessary Journal entries.
Youare [Ans.: () Sacrificing Ratio between Aand B= 15:4. Since Cis gaining 4/60th share in the
profits, he will also compensate Aand Bproportionately (i.e, 7 5,40,000 x 4/60 = 36,000).
(i) For Adjustment of Goodwill: Dr. Cs Capital A/c by 36,000; E's Current A/c by 45,000 and
Premium for Goodwill Alc by *90,000;Cr. A's Capital A/c by 1,35,000 and B's Capital A/c by ? 36,000.]
Hidden Goodwill
partners in afirm with capital of 60,000 and 1,20,000respectively. They decide to admit C
34. AandJBare
nthe partnership for 1/4th share in the future profits. Cis to bring in asum of 70,000 as his capital.
Calculate amount of goodwill. (Al2008 O
[Ans.: Goodwill 30,000.]
26 Anil and Sunil are partners in afirm with fixed capitals of 3,20,000 and
2,40,000 respectively.
April 2012.
They admitted Charuas a new partner for 1/4th share in the profits of the firm on 1st
Charu brought ? 3,20,000 as her share of capital.
(AI 2013 )
Calculate value of goodwill and record necessary Journal entries.
Charu's Current A/c by 1,00,000;
Ans.: (i) Dr. Bank A/c and Cr. Charu's Capital A/c by 3,20,000; () Dr. Goodwill by 4,00,000.]
Cr. Anil's Current A/c by 50,000 and Sunil's Current A/c by 50,000..Hidden
profits in the ratio of 3 : 2. Their capitals were
0. Bhuwan and Shivam were partners in afirm sharing
1st April, 2023 as new partner for 1/4th share
(0,000 and 75,000 respectively. They admitted Atul on and record
Calculate the value of goodwill of the firm
muure profits. Atulbrought75,000 as his capital. admission.
(Foreign 2014, Modified)
ecessary Journal entries for the above transactions on Atul's
of goodwillof the firm-1,00,000; Atul's share in goodwill-* 25,000.
[Ans.: Value by 75,000; (ii) Dr. Atul's Capital A/c
or
Bank Ac and Cr. Atul's Capital A/c
()Dr. Bhuwan's Capital Acby 15,000
Atul's Current A/c by 25,000; Cr. Capital A/c by 10,000.]
and Shivam's
1/4th share in the
S1, Xand Y partners with capitals of 50,000 each. They admit Zas a' partner for showed a credit
are Loss ACCount
profits of the firm. Z brings in 80,000 as his share of capital. Profit &
balance of 40,000 as on date of admission of Z.
[Ans.: Hidden Goodwill
1,00,000.]
Give necessary Journal entries torecord the goodwill.
+ 80,000).]
Hint 50,000 + 50,000 + 40,000
Hidden Goodwill = 80,000 x 4/1) -
 Chapter 4· Admission of
Revaluation of Assets and
42. Arun and
Vijay are
Reassessment
partners in afirm sharing profitof &Liabilities
loss in the ratio of 3: 2.
Liabilities BALANCE SHEET (Extract)
Assets
2,00,000
If the value of
machinery in the Machinery
shownin the New Balance Sheet. Balance Sheet is excess by 33%, find the value of machinery to be
3 [Ans.: 1,50,000.]
Hint: Overvalued =* 2,00, 000 ×33/133
or 2,00,000 x
4 =50,000.]
3
43. Pass entries in the firm's Journal for
the
(0) Machinery be reduced by ? following on admission of a partner:
(i) Aprovision be created for
16,000 and Building be appreciated by 40,000.
(i) Provision for Doubtful Debts @5% of
warranty claims be increased by 12,000.Debtors amountingto 80,000.
(iv) Furniture (Book Value 50,000) is
to be
AA Eurniture (Book
Value 50,000) is to be reduced toby 40%.
reduced 40%.
[Ans.: () (a) Dr. Revaluation AlC and Cr, Machinery A/c by R 16,000.
(b) Dr. Building A/c and Cr. Revaluation A/c by 40,000.
(0) Dr.
Revaluation A/c and Cr, Provision for Doubtful Debts by 4,000.
(M0) Dr. Revaluation Ac and C. Provision for
(M) Dr. Revaluation A/c and Cr. Furniture Alc Warranty Claims A/c by 12,000.
by 20.000R 50,000 x 40/ 100).
(V) Dr. Revaluation Alcand Cr. Furniture A/c by
A4, Pass entries in firm's Journal for the 30,000( 50,000 X60/100).]
(i) Unrecorded Investments of ?
following on admission of a partner:
20,000 are to be accounted.
(i) Unrecorded liability towards suppliers for
5,000 is to be accounted.
(ii) An item of 1,600 included in Sundry Creditors is not likely to be claimed and hence should be
written back.
[Ans.: () Dr. Investments A/cand Cr. Revaluation A/c by 20,000.
(i) Dr. Revaluation Ac and Cr. Sundry Creditors A/c by 5,000.
(i) Dr. Sundry Creditors and Cr. Revaluation A/c by? 1,600.]
45. Xand Yare partners in a firm sharing profits in the ratio of 3:2. They admitted Z as a partner and fixed
new profit-sharing ratio as 3:2:1. At the time.of admission of Z, Debtors and Provision for Doubtful Debts
existed at 50,000 and 5,000 respectively. All debtors are good. Pass the necessary Journal entries.
[Ans.: () Dr. Provision for DoubtfulDebts A/c and Cr. Revaluation A/c by 5,000.
(0) Dr. Revaluation A/c by 5,000; Cr. Xs Capital A/c by? 3,000, and Y's Capital A/c by 2,000.]
46. Xand Yare partners in a firm sharing profits in the ratio of 3 : 2. They admitted Z as a partner for
1/4th share. At the time of admission of Z, Stock (Book Value 1,00,000) is to be reduced by 40% and
Furniture (Book Value 60,000) is to be reduced to 406. Pass the necessary Journal entries.
[Ans.: () Dr. Revaluation A/c by 76,000; Cr. Stock Alc by 40,000 and Furniture Ac by 36,000.
30,400; Cr. Revaluation A/c by 76,000.1
(i) Dr. X's Capital Acby 45,600 and Y's Capital A/cby
admitted Z as a partner for 1/4th share
Xand Yare partners sharing profits in the ratio of3:2. They
appeared at 80,000. Half of the investments to
Or profits. At the time of admission of Z, Investments Remaining investments were valued at
Y in their profit-sharing ratio at book value.
be taken by X and
(50,000. Pass the necessary Journal entries. 40.000
Capital Alc by 24,000 and Y's Capital A/e by 16,000; Cr. Investments A/c by
lAns.: (i) Dr. X's (ü) Dr. Investments A/c and Cr. Revaluation A/c by 10,000.
Capital A/c by 6,000 and Y's Capital A/c by 4.00o1
Cr. X's
(ii) Dr.Revaluation A/c by 10,000;
 48. Ashok and Bhaskar are partners in afirm sharing profits in the ratio of 3: 2. They admitted
à partner for 1/4th share of profits. At the time of admission of Chaman, Sundry Debtors
for Doubtful Debts existed at? 76,000 and 8,000 respectively. { 6,000 of the debtorsand
Aprovision of 5% is to be created on Sundry Debtors for doubtful debts. Pass the necessary
CprohvedaPrmroaisnon a

JAns.: () Dr. Bad Debts A/c and Cr. Sundry Debtors Journal
Alc
(ii) Dr. Provision for Doubtful Debts A/c and Cr. Bad Debts by? entrieg
(ii) Dr. Revaluation A/c and Cr. Provision for Doubtful A/c by
Debts
by
60 .
*5/100 76,000-6,000) -- 8,000-
(iv) Dr. Ashok's Capital AW/c by R900 and Bhaskar's Capital A/c by ? 600; C. Revaluation 6,000) =R
A/c by 1,5 0 .
49. At the time of admission of apatner Suresh, assets and liabilities of Ramesh and Naresh
as followS: 1reval,5u0ed4
were

(a) AProvision 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) AProvision of 2,000 was made for an Outstanding Bill for repairs.
(f) Unrecorded Liability towards suppliers was 3,000.
Pass necessary Journal entries.
[Ans.: () Dr. Revaluation A/c by? 10,000; Cr. Provision for Doubtful
Debts by sDon
Provision for Outstanding Repairs Bill A/c by ? 2,000 and Creditors A/c by3.000
(i1) Dr. Creditors A/c by 5,000; Building A/c by ? 40,000 and
Investment A/c by ? 15.00:
Cr. Revaluation A/c by
(ii) Dr. Revaluation A/c by ? 50,000 (Gain (Profit) on 60,000.
Cr. Ramesh's Capital A/c by 25,000 and Nareshs Capital A/c Revaluation:
50. Om and Shiv are partners in a firm sharing by 25,0001
profits equally.
BALANCE SHEET (Extract)
Liabilities Assets
Debtors 1,50,000
Less: Provision for Doubtful Debts
15,000 1,35,000
An amount of 12,000 due from Mohan, a
debtor, is to be written off as no longer receivable. Provision
for Doubtful Debts on remaining debtors is to be
maintained at the current rate.
What amount of Provision for Doubtful Debts
should be credited to maintain its current rate?
[Hint: After subtracting further bad debts of ? 12,000 [Ans.: 10,800.]
Debts will be made on remaining debtors of ? from debtors, Provision for Doubtful
10% ( 15,000/ 1,50,000 X 100). It means 1,38,000. Current Rate of Provision is
After adjusting bad debts of 12,000 from
provision of ? 13,800 (10% of 1,38,000) is
required.
existing (old) provision, there still exists balance of
73,000 ( 15,000 --12,000). So, provision of only 10,800 (
created through Revaluation Account.] 13,800 -3,000) is required to be
Reserves and Accumulated Profits/Losses and Preparation of
51, Ram and Shyam were partners in a firm sharing profits and Revaluation Account
losses in the ratio of 2:1. Mohan was admitted
for 1/3rd share in the profits. On the date of Mohan's admission, the
Balance Sheet of Ram and Shyam
showed General Reserve of 2,50,000 and a credit balance of 50,000 in Profit &
Loss Account Pass
necessary Journal entries on the treatment of these items on Mohan's admission.
JAns: Dr. General Reserve A/c by 2,50,000 and Profht &Loss Alc
by~ 50.000:
Cr. Ram's Capital A/c by 2,00,000 and Shyam's
Capital A/c by 1.00.000.]
 4 Adnmission of a Partner
partners in a firnm
NandYare sharin9 profits and losses in the ratio
partherfor 1/5th share in of 3.) On 1st April,
s2.
as a
admit Zand a Jabit balance ot *
profits.
On that date, 2023, they
Reserve 20,00O in the Profit &Loss there was a balance of 1,50,000 in General
regarding adjustment of reserve
and Account of the firm. Pass necessary Journal
entries
[Ans.:() D: General Reserve AC by í 1,50,000; Cr. Xs accumulated profit/loss.
(0i) Dr. X's Capital A/c by Capital A/c by 90,000 and Y's Capital Alc by 60,000.
12,000 and Y's
Capital A/c by 8,000; Profit &Loss A/c by 20,000.)
Zare partners sharing prohts and
Yand losses in the ratio of 5:3:2. They admit Was
1/6thshare. Following
is the extract of the partner ror
Balance Sheet on the date of
admission:
ebilities Assets
GeneralReserve
ontingencyReserve
36,000 Advertisement Suspense A/c 24,000
6,000
LossAc 18,000
oit& Journal entries
Pass necessary
(b)Give the Journal entry to distribute"Workmen Compensation Reserve' of 72,000 at the time of
admission of. Z, if there is no claim against it. The firm has two partners Xand Y.
()Givethe Journal entry to distribute "Workmen Compensation Reserve' of 72,000 at the time of
admission of Z, if there is claim ofR 48,000 against it. The firm has two partners Xand Y.
Givethe Journal
entry to distribute 'Investment Fluctuation Reserve' of 24,000 at the time of
(d) admission of. Z, when Investment (Market Value 1,10,000) exists at1,20,000. The firm has two
Y
partnersX and
Givethe Journal entry to distribute General Reserve' of 4,800 at the time of admission of Z, when
(e)
n of General Reserve is to be transferred to Investment Fluctuation Reserve. The firm has two
partnersX and Y.
A/c by 36,000; Contingency Reserve A/c by 6,000; and Profit &Loss Ac
JAns.:(a)() Dr. General Reserve
by?18,000; Cr. X's Capital A/c by ? 30,000; Y's Capital A/c by 18,000 and Z's Capital A/c by ? 12,000.
(ii) Dr. X's Capjtal A/c by ? 12,000; Y's Capital A/c by? 7,200 and Z's Capital A/c by? 4,800;
Cr. Advertisement Suspense Ac by ? 24,000.
(b) Dr. Workmen Compensation Reserve A/c by 72,000; Cr. X's Capital A/c by? 36,000
and Y's Capital A/c by ? 36,000.
Compensation
(c) Dr. Workmen Compensation Reserve A/c by? 72,000; Cr. Workmen
Capital A/c by ? 12,000.
Claim A/c by 48,000; Xs Capital A/c by 12,000 and Ys
24,000; Cr. Investment A/c by 10,000;
(d) Dr. Investment Fluctuation Reserve A/c by 7,000.
X's Capital A/c by 7000 and Ys Capital A/c by 960;
A/c by
General Reserve A/c by ? 4,800; Cr. Investment Fluctuation Reserve
(e) Dr. A/c by 1,920.]
Xs Capital A/cby 1,920 and Y's Capital
of Murariand Vohra sharing profits &losses in the ratio of 3:2 was
Sheet
a) An extract of the Balance
as under:
Assets
Lazoilities Value 1,14,000) 1,20,000
neral Reserve 30,000| Investments(Market 6,000
2,700 Advertisement Expenditure
Contingency Reserve 18,000 (Deferred Revenue)
rofit &Loss AC
MiStment Fluctuation Reserve 9,000
Mmen Compensation Reserve 7,200
mdloyes Provident Fund 20,000
profits. Aclaim on account of
Workmen
1/5th share of
New Partner Krishna was admitted for
900.
Compensation Reserve is estimated for accumulated profits and
losses.
Pass the necessaryJournal entriesto adjust
 (b) A, Band C were partners
sharing profits and losses in the ratio of 6 : 3: 1.
partnership with effect from 1st April, 2023. The
new profit-sharing ratio between A, They
3:3:3:1. They also
decide to record the effect of the B.C. take
by passing an
adjUstment entry: following without affecting their
General Reserve Book Values ()book
Contingency Reserve 1,50,000
Profit &Loss A/c (Cr.) 60,000
Advertisement Suspense A/c (Dr.) 90,000
Pass the necessary adjustment entry
through the Partner's Current Account. 1,20,000
[Ans: (a) Credit for Share in Reserves & Profits: Murari
{
Debit for Share in Losses: Murari 3,600;
(b) Dr. C's Current A/c by 36,000 and D's
36,000; Vohra
Vohra 2,400
Current A/c by 18,000; Cr. A's Current(Deferred
Preparation of Revaluation Account and Partners' Capital Alcby
55. Amit and Anil are Accounts 5409
partners sharing profits and losses in the ratio of 2: 1.
31st March, 2023 was as Their Balance
follows: Sheet astn
Liabilities Assets
Sundry Creditors 58,000 Cash in Hand
General Reserve
12,000 Cash at Bank
Capital A/cs:
Amit
Sundry Debtors
1,80,000 Stock
Anil
1,50,000 3,30,000 Machinery
Building 100M
4,00,000 15000
Ankit is admitted as a partner on the date of the Balance
4,00,000
Sheet on the following terms:
(a) Ankit will bring in 1,00,000 as his capital and
60,000 as his share of goodwillfor 1/4th chos
in profits.
(b) Machinery is to be appreciated to 1,20,000 and the value of
building is to be appreciated by 10%
(c) Stock is found overvalued by 4,000.
(d) General Reserve will continue to appear in the books of the
reconstituted firm at its original valus
(e) A Provision for Doubtful Debts is to be created at 5% of debtors.
(f) Creditors were unrecorded to the extent of 1,000.
Prepare Revaluation Account and Partners' Capital Accounts.
[Ans.: Gin (Profit) on Revaluation Account- 27,000; Partners' Capital Accounts
Amit 2,40,000; Anil 1,80,000; Ankit- 1,00!
56. Vimal and Nirmal are partners in a firm sharing profits and losses in the ratio of 5:3. They admit Kalasn
into the firm on 1st April, 2023, when their Balance Sheet was as follows:
Liabilities Assets
800
Vimal's Capital 32,000 Goodwill 3800
Nirmal's Capital 34,000 Machinery 500
General Reserve 8,000Furniture 23,00
Bank Loan 6,000 Debtors 700
Creditors 6,000 Stock 5000
Cash 86.000
86,000
 nsofKailashs IKsion of a Partner 4,107
TOlOWS:
will bring ? 20.000 as his
share of
is notto
bring
goodwil in cash, capital and tl ha Antitlad ta rd
Kailash
of the
firmis
valued Vimal
on the basis of 2and Nirmal raise the ahars in the prom
Average proft of the last three years is years purchase of theanndwill the bonks
B
in
and stock are revalued
Machinery at 6.000. avarane nraft of the last nta
i) Revaluation Arcount and Partners45,000 and 8.000
Capital respectively. the above
IAns.: Gain(Proft) Accounts
Prpare
on incornnrating adËustments.
VimalRRevahuat ion Nirmal8000: Partners
39. 500: 28.500:
Capital Accounts
Kailash
of, Revaluation Account, Kailash's Current A/c (Dr)E 30.000
I 000.
Preparation
equal partners with capitals of
Partners' Capital Accounts and Balance Sheet
Zare 15,000;
to•dmit W into equal partnership upon payment in cash 17,500 andfor 1/4th
15.000 20.000share of the goodwill
respectively. and
They agree
capital, both sums to
18.000as his remain in the business. The liabilities of the
apart from cash, consist of Motors 12,000, Furniture 4,000. old firm were
s0.000
the assets, Stock 26,500 and Debtors
The Motors and Furniture were
37,800. revalued at9,500and 3,800
PassJournalentries to give effect to the above arrangement and alsoshow respectively.
Balance Sheet of the new hrm.
[Ans.: LoSS on Revaluation 2.700: Balance Sheet
Total I,12,800.)
Following was the Balance Sheet of Aand B who were sharing profits in the
31stMarch, 2023 ratio of 2 : I as at

Labilities
Assets

CanitalA/cs: Building 25,000

15,000 Plant and Machinery 17,500
10,000 25,000 Stock 10,000
SndryCreditors 32,950 Sundry Debtors 4,850
Cash in Hand 600
57,950 57,950

They admitCinto partnership on 1st April, 2023 on the following terms:

firm.
(al Cwas to bring 7,500as his capital and 3,000 as goodwill for 1/4th share in the
5%.
(b) Values of the Stock and Plant and Machinery were to be reduced by
Debtors ?375.
(c) AProvision for Doubtful Debts was to be created in respect of Sundry
(d) Building was to be appreciated by 10%.
arrangements. Prepare Profit & Loss Adjustment
Pass necessary Journal entries to give effect to the
Accounts and Balance Sheet of the new firm.
HCCount (or Revaluation Account), Partners' Capital A/cs: A- 17,500;
[Ans.: Revaluation Gain (Profit) 750; Capital Total-* 69,200.]
B-11,250; C-* 7,500; Balance Sheet
of3:2. Their
carrying on business in partnership and sharing profits and losses in the ratio
a b are
Balance Sheet as at 31st March, 2023 stood as:
Labilities Assets
1,500
(seditors 11,800 Cash 28,000
Gneral Reserve 20,000 Stock 19,500
Debtors 2,500
51,450
BsCapital 36,750 88,200|Furniture
Machinery
48,500
20,000
Goodwill 1,20,000
1,20,000
 1/8th share in future
They admit Cinto partnership on 1st April, 2023 and give him profits
following terms: on the
(a) Goodwill of the firm be valued at twice the average of the last three years' profits which
to 21,000; 24,000 and? 25,560.
(b) C is to bring cash for the amount of his share of goodwilI.
amounte
(c) Cis to bring cash 15;000 as his capital.
Sheet of the new firm and
Pass Journal entries recording these transactions, draw out the Balance
new profit-sharing ratio. [Ans: Balance Sheet Total 1,20,880; New Profit-sharing
Ratio--21:deter ine
60. Balance Sheet of Jand Kwho share profits in the ratio of 3:2 is as
BALANCE SHEET as at 31st March, 2023
follows: :14:54
Liabilities Assets

Reserve
1,00,000 Cash
1,50,000 Other Assets
J's Capital
K's Capital 1,00,000 2,50,000 15000
3,50,000
3,50,0
M joins the firm from 1st April, 2023 for half share in the future profits. He is to pay 1,00,000 as
and 3.00,000 for capital. Draft the Journal entries and prepare Balance Sheet ineach of the followinn e
(a) If M gets his share of profits in the profit-sharing ratio of the old partners.
(b) If M gets his share of profits in equal proportion from the old partners.
the future nrst.
(c) If Mgets his share of profits in the ratio of 3:1from the old partners, determine
sharing ratio of the partners in each case.
[Ans.: Capital A/cs: Case (a): J2,70,000; K- 1,80,000; M--7300D%
Case (b): R2,60,000; K--* 1,90,000; M-R30001
Case (c): JR )85,000; K-* 1,65,000;M3,00.0
Balance Sheet Total in each case7,50.0
New Profit-sharing Ratio: Case (a) 3:2:5; (b) 7:3: 10: (c) 9: 11:201
partnership busines.
61. Given below is the Balance Sheet ofAand Bon 31st March, 2023, who are carrying on
Aand Bshare profits and losses in the ratio of 2:1.
BALANCE SHEET OF A AND B as at 31st March, 2023
Assets
Liabilities
10,000 Cash in Hand 10,000
Bills Payable 40,000
Creditors
58,000 Cash at Bank
60,000
2,000 Sundry Debtors
Outstanding Expenses 40,00
Capital A/cs: Stock
1,000
A 1,80,000 Plant
1,5000
B 1,50,000 3,30,000 Building 40000
4,00,000

Cis admitted as a partner. on 1st April, 2023 on the following terms:

the profis
bring 1,00,000 as his capital and 60,000 as his share of goodwillfor 1/4thsharein
(a) C will appreciatedby10%.
(b) Plant is to be appreciated to ? 1,20,000 and the value of building is to be
(c) Stock is found overvalued by 4,000.
(d) A provision for doubtful debts is to be created at 5% of sundry debtors.
(e) Creditors were unrecorded to the extent of 1,000. Accounts,and
and Partners' Capital
(NCERT MOdiñed
Pass the necessary Journal entries, prepare the Revaluation Account B-T|790
show the Balance Sheet after the admission of C. A-R238,000; !
[Ans.: Gain on Revaluation 27,000; Capital A/cs: Total-.
R,00,000; Balance Sheet
 Adjustment of the Old Partners' Capitals on the Basis of Nevw orIncoming 900\
Partner's Capital
75. Xand Ywere partners in the profit-sharing ratio of 3: 2. Their balance sheet as at 31st March,
as follows: 2022 wa

BALANCESHEET as at 31st March, 2022

Liabilities Assets
Creditors 56,000 Plant and Machinery
General Reserve 14,000 Buildings 70,000
Capital A/cs: Stock 98,000
X
1,19,000 Debtors
42,000
21.000
1,12,000 2,31,000Less: Provision 7,000
Cash in Hand 35,000
3,01,000 77,000
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.
(ii) Plant and Machinery were found to be undervalued by ? 14,000 Building was to
1,09,000. brought up to
(iv) All debtors are good.
(v) Capitals of Xand Y willbe
adjusted on the basis of Z's share and adjustments will be
necessary current accounts. done by opening
You are required to prepare Revaluation
Account and Partners' Capital Accounts. (CBSE Sample Paper
[Ans.: Gain on Revaluation 32,000; Partners' 2023)
Capital ACCounts: X- 1,68,000; Y 1,12,00;
Z-* 56,000; X's Current A/c (Dr.) 13,000: Y's
[Hint: 'AIIDebtors are good' means Current A/c (Cr.) 24,00]
Provision Doubtful Debts is no longer required hence,
for
credited to Revaluation Account.] should be
 (e) The value of stock, furniture and investments is reduced by 20%, whereas the value
of Land
Building and Plant and Machinery will be appreciated by 20% and 10% respectively
through their
(f) Capital Accounts of the partners will be adiusted on the basis of W's Capital Current
Partners' Current Accounts and Capital Accounts. Acco
Prepare Revaluation Account,
Current A/cs: X-R 1,00,525; Y
(Ans.: Loss on Revaluation-8,950; Partners
Z 83, 175; Partners' Capital Alcs: X 1,00,000; Y
47,350
1,00,000; Z 50,000 and W 50,0001)and

When the New Partner is required to bring Proportionate Capital

82. Raman and Rohit were partners in afirm sharing profits and
losses in the ratio of 2 : 1 On 31st
2018, their Balance Sheet was as follows:
March,
31st March, 2018
BALANCE SHEET OF RAMAN AND ROHIT as at
Liabilities Assets
Plant and Machinery
Capitals:
Furniture and Fixtures 1,75,0
Raman 140,000 65,00
Rohit 1,00,000 2,40,000 Stock 47,000
40,000 Debtors 1,10,000
Workmen Compensation Fund
Creditors 1,60,000 Less: Provision for Doubtful Debts 7,000 1,03,000
Bank Balance
5000
4,40,000 4,40,000

On the above date, Saloni was admitted in the partnership firm. Raman surrendered 2/5th of his share
and Rohit surrendered 1/5th of his share in favour of Saloni. It was agreed that:
(0 Plant and machinery willbe reduced by 35,000 and furniture and fixtures will be reduced to 758,5.
(Gi) Provision for bad and doubtful debts will be increased by 3,000.
(ii) Aclaim for 16,000 for workmen's compensation was admitted.
(iv) Aliability of 2,500 included in creditors is not likely to arise.
() Saloni willbring ? 42,000 as her share of goodwill premium and proportionate capítal.
Prepare Revaluation Account, Partners' Capital Accounts and Balance Sheet of the reconstituted firm.
(CBSE 2019)
(Ans.: Loss on Revaluation = 42,000; Partners' Capital Accounts: Raman< l,0l,00
Rohit-* 1,02,400; Saloni - 1,32,000: Balance Sheet Total 5,69,500!