Samacheer Kalvi 12th Accountancy Guide Chapter 5 Admission of a Partner

Tamilnadu State Board New Syllabus Samacheer Kalvi 12th Accountancy Guide Pdf Chapter 5 Admission of a Partner Text Book Back Questions and Answers, Notes.

Tamilnadu Samacheer Kalvi 12th Accountancy Solutions Chapter 5 Admission of a Partner

12th Accountancy Guide Admission of a Partner Text Book Back Questions and Answers

I. Multiple Choice Questions

Choose the correct answer

Question 1.
Revaluation A/c is a
(a) Real A/c
(b) Nominal A/c
(c) Personal A/c
(d) Impersonal A/c
Answer:
(b) Nominal A/c

Question 2.
On revluation, the increase in the value of assets leads to
(a) Gain
(b) Loss
(c) Expense
(d) None of these
Answer:
(a) Gain

Question 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:
(a) The old partners

Question 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
(a) all the partners
(b) the old partners
(c) the new partner
(d) the sacrificing partners
Answer:
(b) Sacrificing ratio

Question 6.
Which of the following statements is not true in relation to the 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:
(d) The existing agreement does not come to an end

Question 7.
Match List-I with List-II and select the correct answer 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

Answer:
b

Question 8.
Select the odd one out
(a) Revaluation profit
(b) Accumulated loss
(c) Goodwill brought by a new partner
(d) Investment fluctuation fund
Answer:
(c) Goodwill brought by a new partner

Question 9.
James 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.
(a) 1:3
(b) 3:1
(c) 5:3
(d) 3:5
Hint:

Answer:
(c) 5:3

Question 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
Hint:
Sacrifice ratio = old ratio – new ratio
Old partner’s = Balaji, Kamalesh

Answer:
(d) 1:2

II. Very Short Answer Questions

Question 1.
What is meant by the revaluation of assets and liabilities?
Answer:
When a partner is admitted into the partnership the assets and liabilities are revealed 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.

Question 2.
How are accumulated profits and losses distributed among the partner at the time of admission of a new partner?
Answer:
The following and the adjustment are necessary 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 the new profit sharing ratio (if no agreed).

Question 3.
What is sacrificing ratio?
Answer:
The sacrificing ratio is the proportion of the profit which is sacrificed or foregone by the old partners in favour of the new partner. The purpose of finding the sacrificing ratio is to share the goodwill brought in by the new partner.
Sacrifice Ratio = Old share – New share

Question 4.
Give the journal entry for writing off existing goodwill at the time of admission of a new partner.
Answer:
Old partners capital /current A/c (in old ratio) Dr. To G/W A/c

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

1. Depreciation on assets – Debited
2. Unrecorded liability – Debited
3. Provision for outstanding expenses – Debited
4. Appreciation of assets – Credited

III Short Answer Questions

Question 1.
What are the adjustments required at the time of admission of a partner?
Answer:
The following adjustments are necessary at the time of admission of a partner.

1. Distribution of accumulated profits, reserves, and losses
2. Revaluation of assets and liabilities
3. Determination of new profit sharing ratio and sacrificing ratio
4. Adjustment for goodwill
5. Adjustment of capital on the basis of new profit sharing ratio

Question 6.
What are the journal entries to be passed on revaluation of ssets and liabilities?
Answer:
Following are the journal entries to be passed to record the revaluation of assets and liabilities:

Question 7.
Write a short note on the accounting treatment of goodwill.
Answer:
Accounting treatment for goodwill on the admission of a partner is discussed below:

Question 1.
When a new partner brings cash towards goodwill
Answer:
When the new brings cash towards goodwill in addition to the amount of capital, it is distributed to the existing partners in the sacrificing ratio.
If the new partner does not bring goodwill in cash or in kind, his share of goodwill must be adjusted through the capital accounts of the partners.

Sometimes the new partner may bring only a part of the goodwill in cash or assets. In such a case, for the cash or the assets brought, the respective account is debited and for the amount not brought in cash or kind, the new partner’s capital account is debited.

If goodwill already appears in the books of accounts, at the time of admission if the partners decide, it can be written off by transferring it to the existing partner s capital account / current account in the old profit sharing ratio.

IV Exercises

Distribution of accumulated profits, reserves, and losses

Question 1.
Arul and Anitha are partners sharing profits and losses in the ratio of 4:3. On 31.03.2018, Ajay was admitted as partner. On the date of admissions, the book of the firm showed a general reserve of ₹ 42,000. Pass the journal entry to distribute the general reserve.
Solution:

(General reserve transferred to old partners capital A/c in the old profit sharing ratio 4:3.)
Answer :
Arul: ₹ 24,000 (Cr.); Anitha: ₹ 18,000 (Cr.)

Question 2.
Anjali and Nithya are partners of firms sharing profits and losses in the ratio of 5:3. They admit Pramila on 01.01.2018. On that date, their balance sheet showed an accumulated loss of ₹ 40,000 on the asset side of the balance sheet. Give the journal entry to transfer the accumulated loss on admission.
Solution:

(Accumulated loss transferred to old partner s capital A/cs in the old ratio.)
Answer:
Profit and loss: ₹ 25,000 (Dr.); Nithya: ₹ 15,000(Dr.)

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 of 31st March 2019 is as follows:

The pass journal entry to transfer the accumulated profit and reserve on admission.
Solution:

Accumulated profits and reserve transferred to old partners capital A/c in the old ratio
Answer :
Oviya : ₹ 37,500; Kavya : ₹ 22,500

Question 4.
Hari, Madhavan, and Kesavan are partners, sharing profit and losses in the ratio of 5:32. As from 1st April 2017, Vanmathi is admitted into the partnership and the new profit sharing ratio is decided as 4:3:2:1. The folio 5 adjustments are to be made.
(a) Increase the value of premises by ₹ 60,000.
(b) Depreciate stock by ₹ 5,000, furniture by ₹ 2, 000 and machinery by ₹ 2,500.
(c) Provide for an outstanding liability of ₹ 500.
Pass journal entries and prepare revaluation account.
Solution:

Question 5.
Seenu and Siva are partners sharing profits and losses in the ratio of 5:3. In view of kowsalya admission, they decided.
(i) To increase the value of the building by ₹ 40,000.
(ii) To bring into record investment at ₹ 10,000, Which have not so far been brought into
(iii) To decrease the value of machinery by ₹ 14,000 and furniture by ₹ 12,000.
(iv) To write off sundry creditors by ₹ 16,000.
Pass journal entries and prepare revaluation account
Solution :

Answer:
Revolution Profit in Rs. 40.000

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 ₹ 12,000 as capital subject to the following adjustments.
(a) Furniture is to be revalued at ₹ 5,000 and the building is to be revalued at ₹ 50,000.
(b) Provision for doubtful debts is to be increased to ₹ 5,500
(c) An unrecorded investment of ₹ 6,000 is to be brought into account.
(d) An unrecorded liability of ₹ 2,500 has to be recorded now.
Pass journal entries and prepare Revaluation Account and capital account of partners after admission.
Solution:


Answer:
Revaluation Profit: ₹16,000; Capital accounts; Sai: ₹ 58,000 (Cr.), Shankar: ₹ 46,000 (Cr.); Shanmugam: ₹ 12,000 (Cr.))

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

Nirmal is admitted as a new partner on 01.04.2018 by introducing a capital of 30,000 for 1/3 share in the future profit subject to the following adjustments.
(a) Stock to be depreciated by ₹ 5,000;
(b) Provision for doubtful debts to be created for ₹ 3,000
(c) Land to be appreciated by ₹ 20,000.
Prepare revaluation account and capital account of partners after admission.
Solution:

Answer:
Revaluation Profit: ₹ 12,000; Capital accounts: Amal ₹ 91,000 (Cr.), Vimal ₹ 65,000 (Cr.), Nirmal ₹ 30,000 (Cr.))

Question 8.
Praveena and Dhanya are partners sharing profits in the ration of 7:3 they admit Malini into the firm. The new ratio among Praveena, Dhanya, and Malini are 5:2:3. Calculate the sacrificing ratio.
Solution:
Sacrificing ratio = Old share – New share
OR = 7:3 NR = 5:2:3
Praveena
SR = OR – NR
\(\frac{7}{10}-\frac{5}{10}=\frac{2}{10}\)
Dhanya
= \(\frac{3}{10}-\frac{2}{10}=\frac{1}{10}\)
SR = OR – NR
SR = 2:1
Answer :
Sacrificing 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.
Solution :

Answer:
New profit sharing ratio: 2:2:1 Sacrificing ratio 1:0

Question 10.
Raja and Ravi are partners, sharing profit 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.
Solution:


Answer :
New Profit sharing ratio: 11:4:5; Sacrificing ratio 1: 4

Question 11.
Vimala and Kamala are partners, sharing profits 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.
Solution:

Answer :
New Profit sharing ratio 7 : 5 : 2; sacrificing ratio 1 : 1

Question 12
Govinda and Gopal are partners is a firm sharing profit^ 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 R thim. Calculate the new profit sharing ratio and sacrificing ratio.
Solution:


Answer:
New profit sharing ratio 35:32:14; Sacrificing ratio 5:2

Question 13.
Prema and Chandra share profits in the ratio of 5:3. Hema has admitted 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.
Solution:
Prema : Chandra → 5:3 (OR)
Sacrificing Ratio

Answer:
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.
Solution :
Sacrificing Ratio → Share of New Parter 1/4 → Sacrificed → 7 : 3
karthicks SR

Answer:
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.
Solution:

Answer:
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.
Solution:
Since share sacrificed proportion and new profit sharing ratio are not given, it is assumed that the existing partners sacrifice in their old profit sharing ratio that is 3:2
Sacrificing Ratio

Answer:
New profit sharing ratio 12:8:5; Sacrificing ratio 3:2

Question 17.
Ambika, Dharani and Padma are partners in a firm sharing profile in the ratio of 5:3:2. they admit Ramya for 25% profit. Calculate the new profit sharing ratio and sacrificing ratio.
Solution:

Answer:
New profit sharing ratio 15:9:6:10; Sacrificing ratio 5:3:2

Adjustment for goodwill

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.
Solution:


Answer:
Share of goodwill: Aparna: ₹ 6,000; Priya ₹ 4,000

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 ₹ 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.
Solution:
Jerald’s share of G/w = 45,000 x \(\frac{1}{3}\) = Rs. 15,000

Answer:
Share of goodwill: Deepak: ₹ 5,000; Senthil: ₹ 5,000; Santhosh: ₹ 5,000

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 ₹ 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.
Solution:
= OR – NR
OR = 5:4
New Ratio = 3:2:1

Answer:
Share of goodwill: Malathi’s Current account: ₹ 2,000; Shobana’s Current account: ₹ 4,000;

Question 21.
Anu and Arul were partners in a 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 f 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.
Solution:
Mano’s Share of G/w = 25,000 x 2/5 = Rs. 10,000

Answer:
Share of goodwill: Anu: ₹ 8,000; Arul: ₹ 2,000;

Question 22.
Varun and Barath are 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 ₹ 15,000 of which he pays ₹ 10,000 in cash. Pass necessary journal entries for adjustment of goodwill on the assumption that the fluctuating capital method is . followed. ‘
Answer:

Answer:
Share of goodwill: Varun : ₹ 10,000; Barath : ₹ 5,000;

Question 23.
Sam and Jose are partners in the 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 the fluctuating capital method, pass the necessary journal entry if the partners decide
(a) Write off the entire amount of existing goodwill
(b) write off ₹ 20,000 of the existing goodwill.
Solution :
To write off the entire amount of goodwill

Answer:
Share of goodwill: (a) Sam: ₹ 18,000 (Dr); Jose : ₹ 12,000 (Dr) (b) Sam: ₹ 12,000 (Dr); Jose: ₹ 8,000 (Dr.))

Comprehensive problems:

Question 24.
Rajan 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 01.04.2017, they admit Ganesan as a new partner on the following arrangements.
(i) Ganesan brings ₹ 10,000 as capital for 1/5 share of profit.
(ii) Stock and furniture are to be reduced by 10%, a reserve of 5% on debtors for doubtful debts is to be created.
(iii) Appreciate buildings by 20%
Prepare revaluation account, partner’s capital account, and the balance sheet of the firm after admission.
Solution :


Answer:
Revaluation profit:: ₹ 2,100; Capital accounts : Rajan : 27075; Selva; ₹ 15,025; Ganesan : ₹ 10,000 Balance sheet total: ₹ 89,600

Question 25.
Sundar and Suresh are partners sharing profit 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:
(a) 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.
(b) That the stock is valued at ₹ 20,000.
(c) That the furniture is depreciated by ₹ 2,000.
(d) That the value of building be depreciated by 20%
Prepare necessary ledger accounts and the balance sheet after admission.
Solution:



Answer:
Answer:
Revaluation loss : ₹ 15,000; Capital accounts: Sundar : ₹ 39,000; Suresh; ₹ 26,000; Sugumar : ₹ 25,000 Balance sheet total ₹ 1,40,000

Question 26.
The following is the balance sheet of James and Justina as on 1.1.2017. They share the 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:
(i) Balan brings ₹ 25,000 as capital.
(ii) His share of goodwill is ₹ 10,000 and he brings cash for it.
(iii) The assets are to be valued as under:
Building ₹ 80,000; Debtors ₹ 18,000; Stock ₹ 33,000
Prepare necessary ledger accounts and the balance sheet after admission.
Solution:


Answer:
Revaluation profit:: ₹ 11,000; Capital accounts : James : ₹ 58,000; Justina; ₹ 68,000; Balan : ₹ 25,000 Balance sheet total: ₹ 1,86,000

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:
(i) Goodwill of the firm is valued at ₹ 80,000 and Rajesh brought cash ₹ 6,000 for his share of goodwill.
(ii) Rajesh is brought ₹ 1,50,000 as his capital.
(iii) Motor car is valued at ₹ 2,00,000; stock at ₹ 3,80,000 and debtors at ₹ 3,50,000.
(iv) Anticipated claim on workmen compensation fund is ^ 10,000
(v) Unrecorded investment of ₹ 5,000 has to be brought into account.
Prepare revaluation account, capital account, and balance sheet after Rajesh’s admission.
Solution:


Answer:
Revaluation profit:: ₹ 15,000; Capital accounts: Anbu: ₹ 5,11,417; Shankar; ₹ 3,79,583; Rajesh : ₹ 1,50,000 Balance sheet total: ₹ 11,71,000

12th Accountancy Guide Admission of a Partner Additional Important Questions and Answers

Question 1.
When A and B sharing profit and losses in the ratio of 3:2. They admit C as a partner giving him 1 /3 share of profits. This will be given by A 8t B
(a) Equally
(b) in the ration of their
(c) in the ratio of profits
Answer:
(c) in the ratio of profits

Question 2.
In order to maintain fair dealings at the time of admission, it is necessary to revalue assets 8t liabilities of the firm to their
(a) Cost Price
(b) Cost price less depreciation
(c) True value.
Answer:
(c) True value.

Question 3.
If the new share of the incoming partner is given without mentioning the details of the sacrifice made by the old partners then the presumption is that old partners sacrifice in the
(a) Old profit sharing ration
(b) Gaining ratio
(c) Capital ratio.
Answer:
(a) Old profit sharing ration

Question 4.
On admission of a new partner, the balance of general Reserve A/c should be transferred to the capital account of
(a) all partners in their new profit sharing ratio
(b) Old partners in their new old profit sharing ratio
(c) Old partners in their new profit sharing ratio.
Answer:
(b) Old partners in their new old profit sharing ratio

Question 5.
The old partners share all the accumulated profit & reserves in their
(a) new profit sharing ratio
(b) Old profit sharing ratio
(c) Capital ratio
Answer:
(b) Old profit sharing ratio

Question 6.
Hie reconstitution of the partnership requires a revision of the existing partners
(a) Profit sharing ratio
(b) Capital ratio
(c) Sacrificing ratio|
Answer:
(a) Profit sharing ratio

Question 7.
……………… ratio is computed at the time by the admission of a partner
(a) gaining ratio
(b) Capitalization
(c) Sacrificing ratio
Answer:
(c) Sacrificing ratio

Question 8.
When unrecorded liability is brought in to books of accounts, it results in
(a) profit
(b) loss
(c) Neither profit nor loss
Answer:
(b) loss

IV Additional Problems:

Question 1.
Anandan and Balaraman partners in a firm with a capital of Rs. 70,000 and Rs. 50,000 respectively. They decided to admit Chandran into the firm with a capital of Rs. 40,000. Give journal entry for Capital brought in by Chandran.
Solution :

Question 2.
Rathai and Kothai are partners sharing profits in the ratio of 3:2. They admit Kanmani for 1/5th share of future profits which she acquires 3/20th from Rathai and 1/20th from Kothai. Calculate new Pro iring ratio and. sacrifice s ratio of old partners.
Solution :

Question 3.
P and Q are partners sharing profits in the ratio of 3:2. They admit R for 1/5th Share which acquires equally from P and Q. Calculate new profit sharing ratio and sacrificing ratio of old partners.
Solution:

Question 4.
Sankar and Saleem are partner in a firm sharing profits and losses in the ration of 3:2 as on 31st March 2005. Their Balarr sheet was as under.

On 1st April 2005, they admit Solomon into partnership on the following condition: Solomon has brought Rs. 1,00,000 as capital.
The value of land and building was to be increased by Rs. 20,000.
Stock and furniture were to be depreciated by Rs. 10,000 and Rs. 5,000 respectively. Rs. 15,000 to be written off from sundry creditors as it is no longer liable.
Provision for doubtful debts is to be increased by Rs. 1,000.
Give journal entries, prepare Revaluation Account and the Balance Sheet.
Solution:

Question 5.
Amar and Akbar are partners in a firm sharing profits and losses in the ratio of 2:1  as 31st March 2005. Their Balan Sh» was as under.

On 1st April 2005, they admit Antony into partnership on the following conditions:
Antony has brought in the capital of Rs. 1,50,000 for 1/5th share of the future profits. Stock and machinery were to be depreciated by Rs. 6,000 and Rs. 15,000 respectively.
Investments Rs. 15,000 not recorded in the books brought into accounts.
Provision for doubtful debts is to be created at 5% on debtors.
A liability of Rs. 4,000 for outstanding repairs has been omitted to be recorded in the books. Give journal entries, prepare Revaluation Account, Capital Account, Bank Account, and the Balance Sheet.
Solution:

Question 6.
Sumathi and Sundari are partners of a firm sharing profit and loss in the ratio of 4 :3. Their Balance Sheet shows Rs. 14,000 as Profit and Loss A/c on the liabilities side. Pass entry.
Solution:

Question 7.
Mahalakshmi and Dhanalakshmi are partners sharing profit and loss in the ratio of 3:2. They admit Deepalakshmi on 1st January 2005. On that date, their Balance Sheet showed an amount of Rs. 25,000 as Profit and Loss A/c in the Asset side. Pass entry.
Solution:

Question 8.
Damodaran and Jagadeesan are partners sharing profits in the ratio of 3:2. They decided to admit Vijayan for 1/5th share of future profit. Goodwill of the firm is to be valued at Rs. 50,000.
Give Journal entries, if
There is no goodwill in the books of the firm.
The goodwill appears at Rs. 30,000
The goodwill appears at Rs. 60,000.
Solution:

Question 9.
Sankari and Sudha are partners sharing profit and loss in the ratio of 3:2. Their Balance Sheet as on 31st March 2005 is as under.

They decided to admit Santhi into the partnership with effect from 1st April 2005 on the following terms:
Santhi to bring in Rs. 60,000 as Capital for 1/3rd share of profits.
Goodwill was valued at Rs. 45,000
The land was valued at Rs. 1,50,000
The stock was to be written down by Rs. 8,000
The provision for doubtful debts was to be increased to Rs. 3,000
Creditors include Rs. 5,000 no longer payable and this sum was to be written off.
Investment of Rs. 10,000 be brought into books.
Prepare Revaluation A/c, Capital A/c, and Balance Sheet of the new firm.
Solution :