# Reconstitution Of A Partnership Firm – Admission Of A Partner Class 12 Accountancy Exam Questions

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## Class 12 Accountancy Exam Questions Reconstitution Of A Partnership Firm – Admission Of A Partner

Class 12 Accountancy students should read and understand the important questions and answers provided below for Reconstitution Of A Partnership Firm – Admission Of A Partner which will help them to understand all important and difficult topics.

Question. On what occasions does the need for valuation of goodwill arise?
Ans. Need of valuation of goodwill arises on the following occasions:-
(i) Change in profit sharing ratio of existing partners.
(ii) Admission of a partner.
(iii) Retirement of a partner.
(iv) Death of a partner.

Question. Why is it necessary to revalue assets and reassess liabilities at the time of admission of new partner?
Ans. It is necessary to revalue assets and reassess liabilities at the time of admission of new partners as if assets and liabilities are overstated or understated in the books then its benefits or loss should not affect the near partner.

Question. What is meant by sacrificing ratio?
Ans. Sacrificing ratio is the ratio in which old partners have agreed to sacrifice their share of profit in favour of the new partner. This ratio is calculated by deducting the new ratio from the old ratio.
Sacrificing Ratio = Old Ratio – New Ratio

Question. State two occasions when sacrificing ratio may be applied.
Ans. (i) On admission of a new partner.
(ii) On change on profit sharing ratio of existing partner

Question. A business has earned average profit of Rs. 60,000 during the last few years. The assets of the business are Rs. 5,40,000 and its external liabilities are Rs. 80,000. The normal rate of return is 10%. Calculate the value of goodwill on the basis of capitalisation of super profits.
Ans. (i)Capital employed = Assets – Liabilities
= 540000 – 80000
= Rs. 460000

(ii) Normal Profit = Capital employed X Normal rate of return/100
= Rs. 460000 X 10/100 = 46000

(iii) Super Profit = Firm’s Average profit – Normal Profit
= 60000 – 46000
= 14000

(iv) Goodwill   = Super profit X 100/ Normal rate of return
= 14000 X 100/ 10
= 140000

Question. The capital of a firm of Arpit and Prajwal is Rs. 10,00,000. The market rate of return is 15% and the goodwill of the firm has been valued Rs. 1,80,000 at two years purchase of super profits. Find the average profits of the firm.
Ans. (i) Super profit = Value of goodwill /Number of years purchase
= 180000/2
= 90000
(ii) Normal Profit = Capital employed X Normal rate of return /100
= 1000000 X 15/ 100
= 150000
(iii) Average Profit = Normal Profit + Super profit
= 150000 + 90000
= 240000

Question. The average profits for last 5 years of a firm are Rs. 20,000 and goodwill has been worked out Rs. 24,000 calculated at 3 years purchase of super profits. Calculate the amount of capital employed assuming the normal rate of interest is 8 %.
Ans. (i) Super profit = value of goodwill/ number of years purchase
= 240000/3
= 80000
(ii) Normal Profit = Average profit – Super profit
= 20000 – 8000
= Rs. 12000
(iii) Capital Employee = Normal Profit X 100/ Normal rate of return
=   12000 X 100/8
= 150000

Question. Rahul and Sahil are partners sharing profits together in the ratio of 4:3. They admit Kamal as a new partner. Rahul surrenders 1/4th of his share and Sahil surrenders 1/3rd of his share in favour of Kamal. Calculate the new profit sharing ratio.
Ans. Rahul’s sacrificing share          = 4/7 X 1/4       = 1/7
Sahil’s sacrificing share            = 3/7 X 1/3       = 1/7
Rahul’s new share                    = 4/7 – 1/7       = 3/7
Sahil’s New share                   = 3/7 – 1/7       = 2/7
Kamal’s share                          = 1/7+1/7         = 2/7
New profit sharing ratio        = 3:2:2

Question. Ajay and Naveen are partners sharing profits in the ratio of 5:3. Surinder is admitted in to the firm for 1/4th share in the profit which he acquires from Ajay and Naveen in the ratio of 2:1. Calculate the new profit sharing ratio.
Ans.  Ajay’s sacrifies                       = 1/4  X 2/3     = 2/12
Naveen’s sacrifies                  = 1/4  X 1/3     = 1/12
Ajay’s new share                    = 5/8 – 2/12     = 11/24
Naveen’s New share              = 3/8 – 1/12     = 7/24
Surender’s share                    = 1/4 or 6/24
New ratio                              = 11:7:6

Question. A and B were partners sharing profits in the ratio of 3:2. A surrenders 1/6th of his share and B surrenders 1/4th of his share in favour of C, a new partner. What is the new ratio and the sacrificing ratio.
Ans.     Old ratio                      = A: B                         = 3:2
A surrender                 = 3/5 X 1/6      = 3/30              =1/10
B surrender                 = 2/5 X 1/4      = 1/10
A’s new share              = 3/5 – 1/10     = 5/10
B’s new share              = 2/5 – 1/10    = 3/10
C’s new share              = 1/10 +1/10   = 2/10
New ratio                   = 5/10, 3/10, 2/10 OR 5:3:2

Sacrificing Ration        = Old ratio – New ratio
A                                  = 3/5 – 5/10    = 1/10
B                                  = 2/5 – 3/10    = 1/10
Sacrificing ratio           = 1:1

Question. Aarti and Bharti are partners sharing profits in the ratio of 5:3. They admit Shital for 1/4th share and agree to share between them in the ratio of 2:1 in future. Calculate new and sacrificing ratio.
Ans.     Old ratio          =          5:3
Shital               =          1/4th Share
Let the profit be Rs. 1
Remaining profit          = 1-1/4             =3/4
Arti : Babita                = 2:1
Arti’s share                 = 3/4 X 2/3      = 1/2
Babita’s Share             = 3/4 X 1/3      = 1/4
New Ratio                  = 1/2, 1/4, 1/4  Or 2:1:1

Sacrificing ratio           = Old ratio – New ratio
Arti’s sacrifies             = 5/8 – 2/4       = 1/8
Babita’s Sacrifies        = 3/8 – 1/4       = 1/8             Sacrificing Ratio        = 1:1

Question. X and Y divide profits and losses in the ratio of 3:2. Z is admitted in the firm as a new partner with 1/6th share, which he acquires from X and Y in the ratio of 1:1. Calculate the new profit sharing ratio of all partners.
Ans.
Old ratio = X:Y = 1:1
Z is admitted for 1/6th share which he acquire from X,Y in the ratio of 1:1
Since 1/6 X 1/2  = 1/12  from X and Y
X’s new ratio     = 3/5 – 1/12 = 31/60
Y’s New ratio     = 2/5 – 1/12 = 19/60
Z’s share           = 1/6
New ratio         = 31/60, 19/60,1/6 or 31:19:10

Question. Rakhi and Parul are partners sharing profits in the ratio of 3:1. Neha is admitted as a partner. The new profit sharing ratio among Rakhi, Parul and Neha is 2:3:2. Find out the sacrificing ratio.
Ans.
Old ratio          = Rakhi : Parul            = 3:1
New ratio = Rakhi: Parul: Neha          = 2:3:2
Rakhi’s sacrifice                                  = 3/4 – 2/7 = 13/28
Parul’s sacrifice                                   = 1/4 -3/7 = 5/28 (Gain)

So, Rakhi’s sacrifice 13/28th share and Parul is gaining to the extent of 5/28th share.

Question. X and Y are partners sharing profits in the ratio of 5:4. They admit Z in the firm for 1/3rd profit, which he takes 2/9th from X and 1/9th from Y and brings Rs. 1500 as premium. Pass the necessary Journal entries on Z’s admission.
Ans.
Cash A/C                                                        Dr. 1500
To premium A/C                                                                     1500
(cash brought in by Z for his share of goodwill)

Premium A/C                                                  Dr. 1500
To X’s capital A/C                                                                  1000
To Y’s Capital A/C                                                                   500
(Goodwill distributed among sacrificing partners in the ratio of 2:1.)

Question. Ranzeet and Priya are two partners sharing profits in the ratio of 3:2. They admit Nilu as a partner, who pays Rs. 60,000 as capital. The new ratio is fixed as 3:1:1. The value of goodwill of the firm was determined at Rs. 50,000. Show journal entries if Nilu brings goodwill for her share in cash.
Ans.
Cash A/C                                                        Dr. 70000
To Nilu’s capital A/C                                                              60000
To premium A/C                                                                     10000
(Cash brought in by new partner)

Premium A/C                                                  Dr. 10000
To Priya’s capital A/C                                                 10000
(Amount of goodwill distributed among sacrificing partner in their sacrificing ratio.)

Question. A and B are partners sharing profits equally. They admit C into partnership, C paying only Rs. 1000 for premium out of his share of premium of Rs. 1800 for 1/4th share of profit. Goodwill account appears in the books at Rs. 6000. All the partners have decided that goodwill should not appear in the new firms books.
Ans.
Cash A/C                                                        Dr. 1000
To premium A/C                                                                     1000
(Amount of goodwill brought in by C)

Premium A/C                                                  Dr. 1000
C’s capital A/C                                                Dr. 800
To A’s capital A/C                                                                  900
To B’s capital A/C                                                                  900
(Rs. 1800 distributed among sacrificing partners in sacrificing ratio.)

Question. A and B are partners sharing profits in the ratio of 3:2. Their books showed goodwill at Rs. 2000. C is admitted with 1/4th share of profits and brings Rs. 10,000 as his capital but is not able to bring in cash goodwill Rs. 3000. Give necessary Journal entries.
Ans.
Cash A/C                                                        Dr. 10000
To C’s capital A/C                                                                  10000
(Cash brought in by C for his share of capital)

A’s capital A/C                                               Dr. 1200
B’s Capital A/C                                              Dr. 800
To goodwill A/C                                                                     2000
(Old goodwill written off among old partners in old ratio.)

C’s capital A/C                                               Dr. 3000
To A’s capital A/C                                                                  1800
To B’s capital A/C                                                                  1200
(Adjustment of goodwill on admission of C)

Question. Piyush and Deepika are partners sharing in the ratio of 7:3. they admit Seema as a new partner. The new ratio being 5:3:2. Pass journal entries.
Ans.
Cash A/C                                                        Dr. 4000
To premium A/C                                                                     4000
(Amount of goodwill brought in by new partner)

Premium A/C                                                  Dr. 4000
To Piyush’s capital A/C                                                          4000
(Goodwill distributed among sacrificing partners in their sacrificing ratio.)

Question. A and B are partners with capital of Rs. 26,000 and Rs. 22,000 respectively. They admit C as partner with 1/4th share in the profits of the firm. C brings Rs. 26,000 as his share of capital. Give journal entry to record goodwill on C’s admission.
Ans.

Cash A/C                                                        Dr. 26000
To C’s capital A/C                                                                  26000
(Amount of capital brought in by new partner.)

C’s capital A/C                                               Dr. 7500
To A’s capital A/C                                                                  3750
To B’s capital A/C                                                                  3750
(C’s share of goodwill distributed among A and B)

Calculation of Hidden goodwill:-
Capital of A and B                          = 26000 + 22000
= 48000
C brings                                          = 26000 for 1/4th share
Total capital of the firm                  = 26000 X 4/1
= 104000
Existing capital of the firm            = 48000 + 26000
= 74000

Goodwill                                         = 104000 – 74000
= 30000

C’s share of goodwill                    = 30000 X 1/4 = 7500

Question. A and B are partners sharing profits in the ratio of 3:2. They admit C into partnership for 1/4th share. C is unable to bring his share of goodwill in cash. The goodwill of the firm is valued at Rs. 21,000. give journal entry for the treatment of goodwill on C’s admission.
Ans.
C’s capital A/C                                               Dr. 5250
To A’s capital A/C                                                                 3150
To B’s capital A/C                                                                  2100
(C’s share of goodwill distributed among old partners in sacrificing ratio i.e. 3:2)

Question. A and B are partners with capitals of Rs. 13,000 and Rs. 9000 respectively. They admit C as a partner with 1/5th share in the profits of the firm. C brings Rs. 8000 as his capital. Give journal entries to record goodwill.

Ans.
Cash A/C                                                        Dr. 8000
To C’s capital A/C                                                                  8000
(Amount of capital brought in by new partner)

C’s capital A/C                                               Dr. 2000
To A’s capital A/C                                                                  1000
To B’s capital A/C                                                                  1000
(Share of goodwill distributed among A and B in sacrificing ratio i.e. 1:1)

Calculation of Hidden Goodwill.
C brings 8000 for 1/5 share

Since total capital of the firm          = 8000 X 5/1
= 40000

Existing capital of the firm              = 13000 + 9000 + 8000
= 30000
Goodwill                                          = 40000 – 30000
= 10000
C’s share of goodwill                        = 10000 X 1/5
= 2000

Question. A, B and C were partners in the ratio of 5:4:1. On 31st Dec. 2006 their balance sheet showed a reserve fund of Rs. 65,000, P&L A/C (Loss) of Rs. 45,000. On 1st January, 2007, the partners decided to change their profit sharing ratio to 9:6:5. For this purpose goodwill was valued at Rs. 1,50,000.
The partners do not want to distribute reserves and losses and also do not want to record goodwill.
You are required to pass single journal entry for the above.
Ans.
C’s Capita; A/C                                  Dr. Rs. 25, 500
To A’s Capital A/C                                                                 Rs. 8,500
To B’s Capital A/C                                                                 Rs. 17,000

Question. A and B were partners in the ratio of 3:2. They admit C for 3/13th share. New profit ratio after C’s admission will be 5:5:3. C brought some assets in the form of his capital and for the share of his goodwill.
Following were the assets:

Assets                          Rs.
Stock                                      2,44,000
Building                                  2,40,000
Plant and Machinery      1,40,000

At the time of admission of C goodwill of the firm was valued at Rs. 12,48,000.
Pass necessary journal entries.
Ans.

Question. X, Y and Z are sharing profits and losses in the ratio of 5:3:2. They decide to share future profits and losses in the ratio of 2:3:5 with effect from 1st April, 2002. They also decide to record the effect of the reserves without affecting their book figures, by passing a single adjusting entry.
Book Figure
General Reserve                                                    Rs. 40,000
Profit 2 loss A/C (Cr)                                             Rs. 10,000