Sample QuestionsAdmission of a Partner questions
One sample from each question group in this chapter. Select any group above to see the full set with answer keys.
If the incoming partner is to bring in premium for goodwill in cash and also a balance exists in the Goodwill Account, then this Goodwill Account is written off among the old partners in:
Answer: B.
View full solution →When $A$ and $B$ sharing profits and losses in the ratio of $3 : 2$ admit $C$ as a partner giving him $\frac{1}{5}^\text{th}$ share of profits. This will be given by $A$ and $B:$
- A
- ✓
In the ratio of their profits.
- C
In the ratio of their capitals.
- D
Answer: B.
View full solution →The balance in the Investments Fluctuation Fund, after meeting the loss on revaluation of investments, et the time of admission of a partner will be transferred to:
- ✓
The Old Partners' Capital Accounts.
- B
- C
- D
Answer: A.
View full solution →General Reserve at the time of admission of a partner is transferred to:
- A
- ✓
Old Partners' Capital Accounts.
- C
Capital Accounts of all partners, including new partner.
- D
Answer: B.
View full solution →$X$ and $Y$ are partners sharing profits in the ratio of $2 : 1.$ They admit $Z$ into the partnership for $\frac{1}{4}^\text{th}$ share in profits for which he brings in $₹. 20,000$ as his share of capital. Hence, the adjusted capital of $X$ and $Y$ will be:
- ✓
$₹. 40,000$ and $₹. 20,000$ respectively.
- B
$₹. 32,000$ and $₹. 16,000$ respectively.
- C
$₹. 60,000$ and $₹. 30,000$ respectively.
- D
Answer: A.
View full solution →X and Y are partners with capitals of ₹ 50,000 each. They admit Z as a partner with $\frac{1}{4}\text{th}$ share in the profits of the firm. Z brings in ₹ 80,000 as his share of capital. The Profit and Loss Account showed a credit balance of ₹ 40,000 as on date of admission of Z. Give necessary journal entries to record the goodwill.
View full solution →Pass entries in the firm's journal for the following on admission of a partner:
- Machinery be depreciated by ₹ 16,000 and Building be appreciated by ₹₹ 40,000.
- A provision be created for Doubtful Debts @ 5% of Debtors amounting to ₹ 80,000.
- Provision for warranty claims be increased by ₹ 12,000.
A and B are partners sharing profits and losses in the ratio of 2 : 5. They admit C on the condition that he will bring in ₹ 14,000 as his share of goodwill in cash to be distributed between A and B. C's share in the future profits or losses will be $\frac{1}{4}\text{th}$ . What will be the new profit-sharing ratio and what amount of goodwill brought in by C will be received by A and B?
View full solution →A and B are partners sharing profits in the ratio of 2 : 1. They admit C for $\frac{1}{4}\text{th}$ share in profits. C brings in ₹ 30,000 for his capital and ₹ 8,000 out of his share ₹ 10,000 for goodwill. Before admission, goodwill appeared in books at ₹ 18,000. Give journal entries to give effect to the above arrangements.
View full solution →A, B, C and D are in partnership sharing profits and losses in the ratio of 36 : 24 : 20 : 20 respectively. E joins the partnership for 20% share and A, B, C and D in future would share profits among themselves as $\frac{3}{10}:\frac{4}{10}:\frac{2}{10}:\frac{1}{10}$ Calculate new profit-sharing ratio after E's admission .
View full solution →A and B were partners in a firm sharing profits and losses in the ratio of 3 : 2. They admitted C as a new partner for $\frac{3}{7}\text{th}$ share in the profit and the new profit-sharing ratio will be 2 : 2 : 3. C brought ₹ 2,00,000 as his capital and ₹ 1,50,000 as premium for goodwill. Half of their share of premium was withdrawn by A and B from the firm. Calculate sacrificing ratio and pass necessary journal entries for the above transactions in the books of the firm.
View full solution →A and B are partners in a business sharing profits and losses in the ratio of $\frac{1}{3}\text{rd}$ and $\frac{2}{3}\text{rd}.$ On 1st April, 2018, their capitals are ₹ 8,000 and ₹ 10,000 respectively. On that date, they admit C in partnership and give him $\frac{1}{4}\text{th}$ share in the future profits. C brings in ₹ 8,000 as his capital and ₹ 6,000 as goodwill. The amount of goodwill is immediately withdrawn by the old partners in cash. Draft the journal entries and show the Capital Accounts of all the Partners. Calculate proportion in which partners would share profits and losses in future.
View full solution →Mr. A commenced business with a capital of ₹ 2,50,000 on 1st April, 2013. During the five years ended 31st March, 2018, the following profits and losses were made:
|
31st March, 2014
|
Loss
|
₹ 5,000
|
|
31st March, 2015
|
Profit
|
₹ 13,000
|
|
31st March, 2016
|
Profit
|
₹ 17,000
|
|
31st March, 2017
|
Profit
|
₹ 20,000
|
|
31st March, 2018
|
Profit
|
₹ 25,000
|
During this period he had drawn ₹ 40,000 for his personal use. On 1st April , 2018, he admitted B into partnership on the following terms:
B to bring for his half share in the business , capital equal to A's Capital on 31st March, 2018 and to pay for the one-half share of goodwill of the business, on the basis of three times the average profit of the last five years. Prepare the statement showing what amount B should invest to become a partner and pass entries to record the transactions relating to admission.
X and Y are partners sharing profits in the ratio of 3 : 2. They admitted Z as a new partner for $\frac{1}{4}\text{th}$ share of profits. At the time of admission of Z, Debtors and Provision for Doubtful Debts appeared at ₹ 76,000 and ₹ 8,000 respectively. ₹ 6,000 of the debtors proved bad. A provision of 5% is to be created on Sundry Debtors for doubtful debts. Pass the necessary journal entries.
View full solution →(Change in Profit-sharing Ratio and Admission: Treatment of General Reseroes). X and Y are partners in a firm sharing profits and losses in the ratio of 5 : 2. On 31st March, 2018, their Balance Sheet showed General. Reserve of ₹ 3,50,000 on date date! they decided to admit Z as a new partner and the new profit-sharing ratio will be 5 : 3 : 2. Give necessary Journal entries in the books of the firm under the following circumstances:
- When they want to transfer the General Reserve to their Capital Accounts.
- When they don't want to transfer general: reserve to their Capital Accounts but prefer to record an adjustment entry for the same.
Verma and Sharma are partners in a firm sharing profits and losses in the ratio of 5 : 3. They admitted Ghosh as a new partner for $\frac{1}{5}\text{th}$ share of profits. Ghosh is to bring in ₹ 20,000 as capital and ₹ 4,000 as his share of goodwill premium. Give the necessary Journal entries:
- When the amount of goodwill is retained in the business.
- When the amount of goodwill is fully withdrawn.
- When 50% of the amount of goodwill is withdrawn.
- When goodwill is paid privately.
View full solution →View full solution →Mohan and Sohan were partners in a firm sharing profits and losses in the ratio of 3 : 2. They admitted Ram for $\frac{1}{4}\text{th}$ share on 1st April, 2018. It was agreed that goodwill of the firm will be valued at 3 years' purchase of the average profit of last 4 years which were ₹ 50,000 for 2014-15, ₹ 60,000 for 2015-16, ₹ 90,000 for 2016-17 and ₹ 70,000 for 2017-18. Ram did not bring his share of goodwill premium in cash. Record the necessary journal entries in the books of the firm on Ram's admission when:
- Goodwill appears in the books at ₹ 2,02,500.
- Goodwill appears in the books at ₹ 2,500.
- Goodwill appears in the books at ₹ 2,02,000.
View full solution →X, Y and Z are equal partners with capitals of ₹ 1,500; ₹ 1,750 and ₹ 2,000 respectively. They agree to admit W into equal partnership upon payment in cash ₹ 1,500 for $\frac{1}{4}\text{th}$ share of the goodwill and ₹ 1,800 as his capital, both sums to remain in the business. The liabilities of the old firm amounted to ₹ 3,000 and the assets, apart from cash, consist of Motors ₹ 1,200, Furniture ₹ 400, Stock ₹ 2,650 and Debtors ₹ 3,780. The Motors and Furniture were revalued at ₹ 950 and ₹ 380 respectively.
Pass journal entries to give effect to the above arrangement and also show Balance Sheet of the new firm.
View full solution →At the time of admission of a new partner C, the assets and liabilities of A and B were revalued as follows:
- A Provision for Doubtful Debts @10% was made on Sundry Debtors (Sundry Debtors ₹ 50,000).
- Creditors were written back by ₹ 5,000.
- Building was appreciated by 20% (Book Value of Building ₹ 2,00,000).
- Unrecorded Investments were worth ₹ 15,000.
- A Provision of ₹ 2,000 was made for an Outstanding Bill for repairs.
- Unrecorded Liability towards suppliers was ₹ 3,000.
Pass necessary journal entries.
