NOTES

A,B and C were in partnership, sharing profits and losses as to A one-half, B one-third and C one-sixth , as from 1^st January,2016 they admitted D into partnership on the following terms:

D to have a one-sixth share which he purchased entirely from A paying A Rs.8,000 for the share of goodwill. Of this amount, A had withdrawn Rs.6,000 and put the balance in the firm as additional capital. As a condition to admission of D as a partner, D also brought Rs.5,000 capital into the firm.. it was further agreed that the investments should be valued at his market value of Rs.3,600 and plant be valued at Rs.5,800

The balance sheet of the old firm on 31.12.2015 was as follows:

Cash at bank Rs.8,000; debtors Rs.12,000;stock Rs.10,000; Investments at cost Rs.6,000; furniture Rs.2,000; plant Rs. 7,000; creditors Rs.21,000; Capital:A Rs.12,000; B Rs.8,000 and C Rs.4000.

The profits for the year 2016 were rs.12,000 and the drawings were A Rs.6,000, B Rs.6,000, C Rs.3,000 and D Rs.3,000.

You are  required to journalise the opening adjustments, prepare the opening balance sheet of the new firm as on 1^st january,2016 and give the capital account of each partner as on 31^st December,2016.

Notes of Partnership Accounts - Admission of a New Partner (Old & New)

1. What is the difference between revaluation account and memorandum revaluation account?
   see in detail
   
   
2. The following was the balance sheet of A, B and c, who were equal partners on January 1,2017

   Liabilities	Rs.	Assets	Rs.
   Bills payable	3,000	Cash	1,000
   Creditors	6,000	Debtors	10,000
   Capital Accounts:		Stock	12,000
   A	20,000	Furniture	5,000
   B	15,000	Building	25,000
   C	10,000	Bills receivable	1,000
   	54,000		54,000

   They agree to take D in the partnership and give him a ¼ share in the profits on the following terms
   1)That D should bring in Rs.6,000 for goodwill and Rs. 10,000 as capital;
   2)That one-half of the goodwill shall be withdrawn by old partners;
   3) That stock and furniture be depreciated by 10%.
   4) That the liability of Rs.1,300 be created against bill discounted;
   5) That the building be valued at Rs. 40,000;
   6) That the values of the liabilities and  assets other than cash are not  to be altered.

   Give the necessary entries to give effect to the above arrangement; prepare revaluation account and opening balance sheet of the firm as newly constituted.

   
   see in detail
   
   

3. Gopal and Govind  are partners sharing profits and losses in the ratio 60:40. The firm’s balance sheet as on 31:03:2016 was as follows:

   Liabilities	Rs.	Assets	Rs.
   Capital Accounts:
   Gopal	1,20,000	Fixed assets	3,00,000
   Govind	80,000	Investments	50,000
   Long term loan	2,00,000	Current assets	2,00,000
   Current liabilities	2,50,000	Loans and advances	1,00,000

    

   Due to financial difficulties, they have decided to admit Guru as a partner in the firm from 1.04.2016 on the following terms:

   Guru will be paid 40% of the profits.

   Guru will bring in cash Rs.1,00,000 as capital. It is agreed that goodwill of the firm will be valued at 2 years purchase of 3 years normal average profits of the firm and guru will bring i cash his share of goodwill. It was also decided that the partners will not withdraw their share of goodwill nor will the goodwill appear in the books of account.

   The profits of the previous three years were as follows:

   For the year ended 31.03.2014: profit Rs.20,000 (includes insurance claim received of Rs.40,000).

   For the year ended 31.03.2015: loss Rs.80,000( includes voluntary retirement compensation paid Rs.1,10,00).

   For the year ended 31.03.2016: profit of Rs.1,05,000 (includes a profit of Rs. 25,000 on the sale of assets).

   It was decided to revalue the assets on 31.03.2016 as follows:

   	Rs.
   Fixed assets (net)	4,00,000
   Investments	Nil
   Current Assets	1,80,000
   Loans and advances	1,00,000

    The new profit sharing ratio after the admission of Guru was 35:25:40.

   Pass journal entries on admission, show goodwill calculation and prepare revaluation account, parner’s capital accounts and balance sheet as on 01.04.2016 after the admission of guru.

   
   see in detail
   
   

4. A,B and C were in partnership, sharing profits and losses as to A one-half, B one-third and C one-sixth , as from 1^st January,2016 they admitted D into partnership on the following terms:

   D to have a one-sixth share which he purchased entirely from A paying A Rs.8,000 for the share of goodwill. Of this amount, A had withdrawn Rs.6,000 and put the balance in the firm as additional capital. As a condition to admission of D as a partner, D also brought Rs.5,000 capital into the firm.. it was further agreed that the investments should be valued at his market value of Rs.3,600 and plant be valued at Rs.5,800

   The balance sheet of the old firm on 31.12.2015 was as follows:

   Cash at bank Rs.8,000; debtors Rs.12,000;stock Rs.10,000; Investments at cost Rs.6,000; furniture Rs.2,000; plant Rs. 7,000; creditors Rs.21,000; Capital:A Rs.12,000; B Rs.8,000 and C Rs.4000.

   The profits for the year 2016 were rs.12,000 and the drawings were A Rs.6,000, B Rs.6,000, C Rs.3,000 and D Rs.3,000.

   You are  required to journalise the opening adjustments, prepare the opening balance sheet of the new firm as on 1^st january,2016 and give the capital account of each partner as on 31^st December,2016.

   
   see in detail
   
   

5. Following is the Balance sheet of Sohan and Mohan on 31^st March, 2012. They share profits and losses in the ratio of 3:2.

                                                                                         Balance sheet as on 31^st March, 2012 

   Liabilities	Amt (Rs.)	Assets	Amt (Rs.)
   Creditors	2,00,000	Cash	20,000
   General Reserve	48,000	Stock	80,000
   Capital Accounts		Sundry Debtors	1,50,000
   Sohan	1,40,000	Furniture	38,000
   Mohan	1,40,000	Plant & Machinery	1,40,000
   		Land & building	1,00,000
   	5,28,000		5,28,000

    

   They agreed to admit Rohan on 1^st April, 2012 as a partner into the firm on the following terms:

             1.    He should bring Rs. 40,000 as a share of goodwill, which is to be retained in the business.

             2.    He should bring Rs. 50,000 as capital for 1/4^th share in future profits.

   3. Land & building to be valued at Rs. 1,20,000, plant and machinery and furniture to be reduced by 10%.
   4. A provision of 5% on debtors to be made for doubtful debts.
   5. The stock is to be taken at a value of Rs. 1,00,000.
   6. The excess capital of Sohan and Mohan over their due proportion of sharing profits in the firm is to be transferred to their respective loan accounts.

   Prepare Profit & Loss Adjustment A/c, Partners Capital A/c and New Balance sheet of the firm. 

   
   see in detail