NCERT Solutions For Class 12 Accountancy Chapter 3 Reconstitution of a Partnership Firm – Admission of a Partner

NCERT Solutions

NCERT Solutions For Class 12 Accountancy Chapter 3 Reconstitution of a Partnership Firm – Admission of a Partner

NCERT Books Solutions For Class 12 Accountancy Chapter 3 Reconstitution of a Partnership Firm – Admission of a Partner

NCERT Solutions For Class 12 Accountancy Chapter 3 Reconstitution of a Partnership Firm – Admission of a Partner
NCERT Solutions For Class 12 Accountancy Chapter 3 Reconstitution of a Partnership Firm – Admission of a Partner

 

NCERT Solutions for Class 12 Accountancy Chapter 3 Admission of a Partner is known as an extremely helpful resource for preparing for the exam. Takshila Learning provides a huge number of NCERT problems and solutions for Admission of a partner Class 12 accountancy Chapter 3 solutions to its students. CBSE Class 12 Accountancy NCERT Solutions are created by subject matter experts to ensure that students are prepared for a successful grade. The CBSE guidelines were followed when creating the questions in the NCERT Books.

NCERT Solutions for Class 12 Accountancy Chapter 3 Reconstitution of partnership provides us with all-inclusive information on all concepts. Because students must learn the fundamentals of the subject in class 12, this class 12 programme is a concise study guide that explains the concepts clearly. You can access and use the direct links for Chapter wise Class 12 NCERT Solutions at any time. The step-by-step approach used to explain the NCERT Solutions for 12th Grade Accounts makes it simple to understand the concepts.

NCERT Solutions for Class 12 Accounts include a wide range of definitions and introductions to the subject, as well as all of the questions found in the NCERT books.

Questions Covered In Admission of a partner Class 12 NCERT Solutions

Question 1 : Identify various matters that need adjustments at the time of admission of a new partner.

Question 2 : Why is it necessary to ascertain new profit sharing ratio even for old partners when a new partner is admitted?

Question 3 : What is sacrificing ratio? Why is it calculated?

Question 4 : On what occasions sacrificing ratio is used?

Question 5 : If some goodwill already exists in the books and the new partner brings in his share of goodwill in cash, how will you deal with existing amount of goodwill?

Question 6 : Why is there need for the revaluation of assets and liabilities on the admission of a partner?

Question 7 : Do you advise that assets and liabilities must be revalued at the time of admission of a partner? If so, why? Also describe how is this treated in the book of account?

Question 8 : What is goodwill? What are the factors that effect goodwill?

Question 9 : Explain various methods of valuation of goodwill.

Question 10 : If it is agreed that the capital of all the partners be proportionate to the new profit sharing ratio, how will you work out the new capital of each partner? Give examples and state how necessary adjustments will be made.

Question 11 : Explain how will you deal with goodwill when new partner is not in a position to bring his share of goodwill in cash?

Question 12 : Explain various methods for the treatment of goodwill on the admission of a new partner?

Question 13 : How will you deal with the accumulated profit and losses and reserves on the admission of a new partner?

Question 14 : At what figures the value of assets and liabilities appear in the books of the firm after revaluation has been done? Show with the help of an imaginary balance sheet.

Question 15 : A and B were partners in a firm sharing profits and losses in the ratio of 3:2. They admit C into the partnership with 1/6 share in the profits. Calculate the new profit sharing ratio?

Question 16 : A, B, C were partners in a firm sharing profits in 3:2:1 ratio. They admitted D for 10% profits. Calculate the new profit sharing ratio?

Question 17 : X and Y are partners sharing profits in 5:3 ratio admitted Z for 1/10 share which he acquired equally for X and Y. Calculate new profit sharing ratio?

Question 18 : A, B and C are partners sharing profits in 2:2:1 ratio admitted D for 1/8 share which he acquired entirely from A. Calculate new profit sharing ratio?

Question 19 : P and Q are partners sharing profits in 2:1 ratio. They admitted R into partnership giving him 1/5 share which he acquired from P and Q in 1:2 ratio. Calculate new profit sharing ratio?

Question 20 : A, B and C are partners sharing profits in 3:2:2 ratio. They admitted D as a new partner for 1/5 share which he acquired from A, B and C in 2:2:1 ratio respectively. Calculate new profit sharing ratio?

Question 21 : A and B were partners in a firm sharing profits in 3:2 ratio. They admitted C for 3/7 share which he took 2/7 from A and 1/7 from B. Calculate new profit sharing ratio?

Question 22 : A, B and C were partners in a firm sharing profits in 3:3:2 ratio. They admitted D as a new partner for 4/7 profit. D acquired his share 2/7 from A. 1/7 from B and 1/7 from C. Calculate new profit sharing ratio?

Question 23 : Radha and Rukmani are partners in a firm sharing profits in 3:2 ratio. They admitted Gopi as a new partner. Radha surrendered 1/3 of her share in favour of Gopi and Rukmani surrendered 1/4 of her share in favour of Gopi. Calculate new profit sharing ratio?

Question 24 : Singh, Gupta and Khan are partners in a firm sharing profits in 3:2:3 ratio. They admitted Jain as a new partner. Singh surrendered 1/3 of his share in favour of Jain: Gupta surrendered 1/4 of his share in favour of Jain and Khan surrendered 1/5 in favour of Jain. Calculate new profit sharing ratio?

Question 25 : Sandeep and Navdeep are partners in a firm sharing profits in 5:3 ratio. They admit C into the firm and the new profit sharing ratio was agreed at 4:2:1. Calculate the sacrificing ratio?

Question 26 : Rao and Swami are partners in a firm sharing profits and losses in 3:2 ratio. They admit Ravi as a new partner for 1/8 share in the profits. The new profit sharing ratio between Rao and Swami is 4:3. Calculate new profit sharing ratio and sacrificing ratio?

Question 27 : Compute the value of goodwill on the basis of four years’ purchase of the average profits based on the last five years? The profits for the last five years were as follows:

Rs
2013 40,000
2014 50,000
2015 60,000
2016 50,000
2017 60,000

Question 28 : Capital employed in a business is Rs. 2,00,000. The normal rate of return on capital employed is 15%. During the year 2015 the firm earned a profit of Rs. 48,000. Calculate goodwill on the basis of 3 years purchase of super profit?

Question 29 : The books of Ram and Bharat showed that the capital employed on 31.12.2016 was Rs. 5,00,000 and the profits for the last 5 years : 2015 Rs. 40,000; 2014 Rs. 50,000; 2013 Rs. 55,000; 2012 Rs. 70,000 and 2011 Rs. 85,000. Calculate the value of goodwill on the basis of 3 years purchase of the average super profits of the last 5 years assuming that the normal rate of return is 10%?

Question 30 : Rajan and Rajani are partners in a firm. Their capitals were Rajan Rs. 3,00,000; Rajani Rs. 2,00,000. During the year 2015 the firm earned a profit of Rs. 1,50,000. Calculate the value of goodwill of the firm assuming that the normal rate of return is 20%?

Question 31 : A business has earned average profits of Rs. 1,00,000 during the last few years. Find out the value of goodwill by capitalisation method, given that the assets of the business are Rs. 10,00,000 and its external liabilities are Rs. 1,80,000. The normal rate of return is 10%?

Question 32 : 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 1/5 share of profits. Ghosh is to bring in Rs. 20,000 as capital and Rs. 4,000 as his share of goodwill premium. Give the necessary journal entries:
a) When the amount of goodwill is retained in the business.
b) When the amount of goodwill is fully withdrawn.
c) When 50% of the amount of goodwill is withdrawn.
d) When goodwill is paid privately.

Question 33 : A and B are partners in a firm sharing profits and losses in the ratio of 3:2. They decide to admit C into partnership with 1/4 share in profits. C will bring in Rs. 30,000 for capital and the requisite amount of goodwill premium in cash. The goodwill of the firm is valued at Rs, 20,000. The new profit sharing ratio is 2:1:1. A and B withdraw their share of goodwill. Give necessary journal entries?

Question 34 : Arti and Bharti are partners in a firm sharing profits in 3:2 ratio, They admitted Sarthi for 1/4 share in the profits of the firm. Sarthi brings Rs. 50,000 for his capital and Rs. 10,000 for his 1/4 share of goodwill. Goodwill already appears in the books of Arti and Bharti at Rs. 5,000. the new profit sharing ratio between Arti, Bharti and Sarthi will be 2:1:1. Record the necessary journal entries in the books of the new firm?

Question 35 : X and Y are partners in a firm sharing profits and losses in 4:3 ratio. They admitted Z for 1/8 share. Z brought Rs. 20,000 for his capital and Rs. 7,000 for his 1/8 share of goodwill. Subsequently X, Y and Z decided to show goodwill in their books at Rs. 40,000. Show necessary journal entries in the books of X, Y and Z?

Question 36 : Aditya and Balan are partners sharing profits and losses in 3:2 ratio. They admitted Christopher for 1/4 share in the profits. The new profit sharing ratio agreed was 2:1:1. Christopher brought Rs. 50,000 for his capital. His share of goodwill was agreed to at Rs. 15,000. Christopher could bring only Rs. 10,000 out of his share of goodwill. Record necessary journal entries in the books of the firm?

Question 37 : Amar and Samar were partners in a firm sharing profits and losses in 3:1 ratio. They admitted Kanwar for 1/4 share of profits. Kanwar could not bring his share of goodwill premium in cash. The Goodwill of the firm was valued at Rs. 80,000 on Kanwar’s admission. Record necessary journal entry for goodwill on Kanwar’s admission.

Question 38 : Mohan Lal and Sohan Lal were partners in a firm sharing profits and losses in 3:2 ratio. They admitted Ram Lal for 1/4 share on 1.1.2013. It was agreed that goodwill of the firm will be valued at 3 years purchase of the average profits of last 4 years which were Rs. 50,000 for 2013, Rs. 60,000 for 2014, Rs. 90,000 for 2015 and
Rs. 70,000 for 2016. Ram Lal did not bring his share of goodwill premium in cash. Record the necessary journal entries in the books of the firm on Ram Lal’s admission when:
a) Goodwill already appears in the books at Rs. 2,02,500.
b) Goodwill appears in the books at Rs. 2,500.
c) Goodwill appears in the books at Rs. 2,05,000.

Question 39 : Rajesh and Mukesh are equal partners in a firm. They admit Hari into partnership and the new profit sharing ratio between Rajesh, Mukesh and Hari is 4:3:2. On Hari’s admission goodwill of the firm is valued at Rs 36,000. Hari is unable to bring his share of goodwill premium in cash. Rajesh, Mukesh and Hari decided not to show goodwill in their balance sheet. Record necessary journal entries for the treatment of goodwill on Hari’s admission.

Question 40 : Amar and Akbar are equal partners in a firm. They admitted Anthony as a new partner and the new profit sharing ratio is 4:3:2. Anthony could not bring this share of goodwill Rs 45,000 in cash. It is decided to do adjustment for goodwill without opening goodwill account. Pass the necessary journal entry for the treatment of goodwill?

Question 41 : Given below is the Balance Sheet of A and B, who are carrying on partnership business on 31.12.2016. A and B share profits and losses in the ratio of 2:1.

Balance Sheet of A and B as on December 31, 2016

Liabilites Amount
(Rs) Assets Amount
(Rs)
Bills Payable 10,000 Cash in Hand 10,000
Creditors 58,000 Cash at Bank 40,000
Outstanding 2,000 Sundry Debtors 60,000
Expenses Stock 40,000
Capitals: Plant 1,00,000
A 1,80,000 Buildings 1,50,000
B 1,50,000 3,30,000
4,00,000 4,00,000

C is admitted as a partner on the date of the balance sheet on the following terms:

(i) C will bring in Rs 1,00,000 as his capital and Rs 60,000 as his share of goodwill for 1/4 share in the profits.
(ii) Plant is to be appreciated to Rs 1,20,000 and the value of buildings is to be appreciated by 10%.
(iii) Stock is found over valued by Rs 4,000.
(iv) A provision for bad and doubtful debts is to be created at 5% of debtors.
(v) Creditors were unrecorded to the extent of Rs 1,000.

Pass the necessary journal entries, prepare the revaluation account and partners’ capital accounts, and show the Balance Sheet after the admission of C.

Question 42 : Leela and Meeta were partners in a firm sharing profits and losses in the ratio of 5:3. On Is Jan. 2017 they admitted Om as a new partner. On the date of Om’s admission the balance sheet of Leela and Meeta showed a balance of Rs 16,000 in general reserve and Rs 24,000 (Cr) in Profit and Loss Account. Record necessary journal entries for the treatment of these items on Om’s admission. The new profit sharing ratio between Leela, Meeta and Om was 5:3:2.

Question 43 : Amit and Viney are partners in a firm sharing profits and losses in 3:1 ratio. On 1.1.2017 they admitted Ranjan as a partner. On Ranjan’s admission the profit and loss account of Amit and Viney showed a debit balance of Rs 40,000. Record necessary journal entry for the treatment of the same.

Question 44 : A and B share profits in the proportions of 3/4 and 1/4. Their Balance Sheet on Dec. 31, 2016 was as follows:

Balance Sheet of A and B as on December 31, 2016

Liabilites Amount
(Rs) Assets Amount
(Rs)
Sundry creditors 41,500 Cash at Bank 26,500
Reserve fund 4,000 Bills Receivable 3,000
Capital Accounts Debtors 16,000
A 30,000 Stock 20,000
B 16,000 Fixtures 1,000
Land & Building 25,000
91,500 91,500

On Jan. 1,2017, C was admitted into partnership on the following terms:

(a) That C pays Rs 10,000 as his capital.
(b) That C pays Rs 5,000 for goodwill. Half of this sum is to be withdrawn by A and B.
(c) That stock and fixtures be reduced by 10% and a 5%, provision for doubtful debts be created on Sundry Debtors and Bills Receivable.
(d) That the value of land and buildings be appreciated by 20%.
(e) There being a claim against the firm for damages, a liability to the extent of Rs 1,000 should be created.
(f) An item of Rs 650 included in sundry creditors is not likely to be claimed and hence should be written back.

Record the above transactions (journal entries) in the books of the firm assuming that the profit sharing ratio between A and B has not changed. Prepare the new Balance Sheet on the admission of C.

Question 45 : A and B are partners sharing profits and losses in the ratio of 3:1. On Ist Jan. 2017 they admitted C as a new partner for 1/4 share in the profits of the firm. C brings Rs 20,000 as for his 1/4 share in the profits of the firm. The capitals of A and B after all adjustments in respect of goodwill, revaluation of assets and liabilities, etc. has been worked out at Rs 50,000 for A and Rs 12,000 for B. It is agreed that partner’s capitals will be according to new profit sharing ratio. Calculate the new capitals of A and B and pass the necessary journal entries assuming that A and B brought in or withdrew the necessary cash as the case may be for making their capitals in proportion to their profit sharing ratio?

Question 46 : Pinky, Qumar and Roopa partners in a firm sharing profits and losses in the ratio of 3:2:1. S is admitted as a new partner for 1/4 share in the profits of the firm, whichs he gets 1/8 from Pinky, and 1/16 each from Qmar and Roopa. The total capital of the new firm after Seema’s admission will be Rs 2,40,000. Seema is required to bring in cash equal to 1/4 of the total capital of the new firm. The capitals of the old partners also have to be adjusted in proportion of their profit sharing ratio. The capitals of Pinky, Qumar and Roopa after all adjustments in respect of goodwill and revaluation of assets and liabilities have been made are Pinky Rs 80,000, Qumar Rs 30,000 and Roopa Rs 20,000. Calculate the capitals of all the partners and record the necessary journal entries for doing adjustments in respect of capitals according to the agreement between the partners?

Question 47 : The following was the Balance Sheet of Arun, Bablu and Chetan sharing profits and losses in the ratio of respectively.

Liabilites Amount
(Rs) Assets Amount
(Rs)
Creditors 9,000 Land and Buildings 24,000
Bills Payable 3,000 Furniture 3,500
Capital Accounts Stock 14,000
Arun 19,000 Debtors 12,600
Bablu 16,000 Cash 900
Chetan 8,000 43,000
55,000 55,000

They agreed to take Deepak into partnership and give him a share of 1/8 on the following terms:
(a) that Deepak should bring in Rs 4,200 as goodwill and Rs 7,000 as his Capital;
(b) that furniture be depreciated by 12%;
(c) that stock be depreciated by 10% ;
(d) that a Reserve of 5% be created for doubtful debts;
(e) that the value of land and buildings having appreciated be brought upto Rs 31,000;
(f) that after making the adjustments the capital accounts of the old partners (who continue to share in the same proportion as before) be adjusted on the basis of the proportion of Deepak’s Capital to his share in the business, i.e., actual cash to be paid off to, or brought in by the old partners as the case may be.

Prepare Cash Account, Profit and Loss Adjustment Account (Revaluation Account) and the Opening Balance Sheet of the new firm.

Question 48 : Azad and Babli are partners in a firm sharing profits and losses in the ratio of 2:1. Chintan is admitted into the firm with 1/4 share in profits. Chintan will bring in Rs 30,000 as his capital and the capitals of Azad and Babli are to be adjusted in the profit sharing ratio. The Balance Sheet of Azad and Babli as on December 31, 2016 (before Chintan’s admission) was as follows:

Balance Sheet of A and B as on 31.12.2016
Liabilites Amount
(Rs) Assets Amount
(Rs)
Creditors 8,000 Cash in hand 2,000
Bills payable 4,000 Cash at bank 10,000
General reserve 6,000 Sundry debtors 8,000
Capital accounts: Stock 10,000
Azad 50,000 Funiture 5,000
Babli 32,000 82,000 Machinery 25,000
Buildings 40,000
1,00,000 1,00,000

It was agreed that:
i) Chintan will bring in Rs 12,000 as his share of goodwill premium.
ii) Buildings were valued at Rs 45,000 and Machinery at Rs 23,000.
iii) A provision for doubtful debts is to be created @ 6% on debtors.
iv) The capital accounts of Azad and Babli are to be adjusted by opening current accounts.

Record necessary journal entries, show necessary ledger accounts and prepare the Balance Sheet after admission.

Question 49 : Ashish and Dutta were partners in a firm sharing profits in 3:2 ratio. On Jan. 01, 2015 they admitted Vimal for 1/5 share in the profits. The Balance Sheet of Ashish and Dutta as on Jan. 01, 2016 was as follows:

Balance Sheet of A and B as on 1.1.2016

Liabilites Amount
Rs Assets Amount
Rs
Creditors 15,000 Land & Building 35,000
Bills Payable 10,000 Plant 45,000
Ashish Capital 80,000 Debtors 22,000
Dutta’s Capital 35,000 Less : Provision 2,000 20,000
Stock 35,000
Cash 5,000
1,40,000 1,40,000

It was agreed that:
i) The value of Land and Building be increased by Rs 15,000.
ii) The value of plant be increased by 10,000.
iii) Goodwill of the firm be valued at Rs 20,000.
iv) Vimal to bring in capital to the extent of 1/5th of the total capital of the new firm.

Record the necessary journal entries and prepare the Balance Sheet of the firm after Vimal’s admission.

 

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Questions And Answers For NCERT Solutions For Class 12 Accountancy Chapter 3 Reconstitution of a Partnership Firm

1) Why is it necessary to ascertain new profit sharing ratio even for old partners when a new partner is admitted?

Answer: Established partners sacrifice their current profit sharing ratio to make room for a part of profit sharing to the new partner, which reduces their profit. As a result, defining the new profit sharing ratio for old partners after adding a new partner is critical, as it provides a more justified profit share.

 

2) What is sacrificing ratio? Why is it calculated?

Answer: The sacrificing ratio refers to the percentage of the benefit share ratio that existing partners give up when a new partner joins the company. It’s determined by subtracting the old profit sharing ratio from the current profit sharing ratio.

Sacrificing ratio = Old profit sharing ratio – New profit sharing ratio

This percentage must be determined so the new partner must compensate the current partner for the benefit sacrifice. It is given to them as a token of goodwill.

 

3) Identify various matters that need adjustments at the time of admission of a new partner.

Answer: Following matters need adjustment when adding a new partner

  • Capital Adjustment among partners
  • Revised calculation of profit sharing ratio
  • Evaluating and adjusting the goodwill of partners who are sacrificing their share
  • Accumulated profits, reserves and losses should be distributed to old partners as per the old ratio that was agreed upon.
  • Revaluation of the Liabilities and Assets to determine the current value and distribution of profit or loss as per the old ratio

 

4) On what occasions is a sacrificing ratio used?

Answer: Sacrificing ratio needs to be used in these occasions:

  • When it is mutually decided by partners of the firm to change profit sharing ratio among the partners.
  • A new partner is introduced in the firm and accordingly the sum contributed by the new partner is distributed as goodwill based on the sacrificing ratio of existing partners.

 

5) Why is there need for the revaluation of Liabilities and Assets on the admission of a partner?

Answer: When a new partner joins the company, the firm’s Liabilities and Assets must be revalued in order to determine the true value of the day. Revaluation is beneficial because the value of liabilities and assets can rise or fall and their values in previous balance sheets may not be justified; however, any assets or liabilities may not be reported at all. As a result, a revaluation account must be prepared to document increases in market value for Liabilities and Assets, and the resulting gains or losses must be spread among the firm’s current partners.

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