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Chapter 5 Admission of a Partner 5.47
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26. A, B and C are partners sharing profits and losses in the ratio of 2 : 3 : 5. On 31st March, 2018, their
Balance Sheet was:
Liabilities ` Assets `
Creditors 64,000 Cash at Bank 18,000
Employees’ Provident Fund 32,000 Bills Receivable 24,000
Profit and Loss A/c 14,000 Furniture 28,000
Capital A/cs: Stock 44,000
A 36,000 Debtors 42,000
B 44,000 Investments 32,000
C 52,000 1,32,000 Machinery 34,000
Goodwill 20,000
2,42,000 2,42,000

They admit D into partnership on the following terms:
(a) Furniture, Investments and Machinery to be depreciated by 15%.
(b) Stock is revalued at ` 48,000.
(c) Goodwill to be valued at ` 24,000.
(d) Employees’ Provident Fund liability is to be increased by ` 1,800.
(e) Prepaid Salaries ` 800.
(f ) D to bring in ` 36,000 towards capital for 1/6th share and Partners to readjust their Capital Accounts
on the basis of their profit-sharing ratio.
(g) D is not in a position to bring in any amount for his share of firm’s goodwill. The partners decide
that the necessary adjustments should be made through D’s Current Account.
Prepare Revaluation Account, Partners’ Capital Accounts, Bank Account and Balance Sheet of the
new firm. [Ans.: Loss on Revaluation—` 11,100;
Partners’ Capital Accounts: A—` 36,000; B—` 54,000; C—` 90,000; D—` 36,000.
A will bring ` 2,620; B will bring ` 13,930 and C will bring ` 44,550 in Cash.
Cash at Bank—` 1,15,100; Balance Sheet Total—` 3,13,800.]
[Hint: For Adjustment of Goodwill:
Dr. D’s Current A/c—` 4,000;
Cr. A’s Capital A/c—` 800; B’s Capital A/c—` 1,200 and C’s Capital A/c—` 2,000.]
27. A and B are partners sharing profits in the ratio of 3 : 2. They admit C into the firm for 3/7th share in
profits which he takes 2/7th from A and 1/7th from B and brings ` 10,000 as premium out of his share
of ` 16,000. Pass Journal entries for the above.
[Ans.: (i) Dr. Bank A/c and Cr. Premium for Goodwill A/c by ` 10,000.
(ii) Dr. Premium for Goodwill A/c—` 10,000;
Cr. A’s Capital A/c—` 6,667 and B’s Capital A/c—` 3,333.
(iii) Dr. C’s Current A/c—` 6,000;
Cr. A’s Capital A/c—` 4,000 and B’s Capital A/c—` 2,000.]
28. X and Y are partners in a firm sharing profits and losses in the ratio of 3 : 2. They admit Z as a new
partner for 1/5th share. Goodwill of the firm is valued at ` 10,000. Goodwill already appears in the books
at ` 5,000. Z brings in 60% of his share of goodwill and ` 40,000 as his capital in cash. The amount
of goodwill brought in cash is withdrawn by the concerned partners to the extent of 30% of what is
credited to them. The profit for the first year of new partnership amounted to ` 20,000.
Pass necessary Journal entries to adjust goodwill and to distribute profits.
[Ans.: Sacrificing Ratio—3 : 2 and New Profit-sharing Ratio—12 : 8 : 5.]
29. A and B are partners sharing profits and losses in the ratio of 3/4 : 1/4. They agree to admit C into the
business. C is to get 1/4th share of future profits. At the time of C’s admission, there was a General
Reserve of ` 4,000 appearing in the Balance Sheet of A and B. Revaluation of assets and liabilities
resulted in gain of ` 2,000. Pass necessary Journal entries on C’s admission.