Target Publications Pvt. Ltd.

Chapter 03: Reconstitution of Partnership (Admission of Partner)

Reconstitution of partnership
03 (admission of partner)
Solution to Practice Q.1.: In the Books of Firm
Profit and Loss Adjustment Account
Dr. Cr.
Amount Amount Amount Amount
Particulars Particulars
` ` ` `
To Investment A/c 300
To R.D.D. A/c 200 By Partner’s Capital A/c
To Stock A/c 1,500 (Loss on Revaluation)
To Cash (Contingent Liability) 500 Sharad 1,500
Pankaj 1,000 2,500
2,500 2,500
Partner’s Capital Account
Dr. Cr.
Sharad Pankaj Nilesh Sharad Pankaj Nilesh
Particulars Particulars
` ` ` ` ` `
To Profit & Loss By Balance b/d 12,000 4,000 –
Adjustment A/c 1,500 1,000 – By Cash A/c – – 10,000
(Loss)
To Balance c/d 10,500 3,000 10,000
12,000 4,000 10,000 12,000 4,000 10,000
st
Balance Sheet as on 1 Apr, 2013
Amount Amount Amount Amount
Liabilities Assets
` ` ` `
Capital Sundry Debtors 6,000
Sharad 10,500 Less: R.D.D. 700 5,300
Pankaj 3,000 Plant & Machinery 7,000
Nilesh 10,000 23,500 Stock 4,500
Sundry Creditors 5,000 Less: Revaluation 1,500 3,000
Investments 3,000
Less: Revaluation 300 2,700
Cash at Bank 10,500
28,500 28,500

Solution to Practice Q.2.: In the Books of Firm

Profit and Loss Adjustment Account
Dr. Cr.
Amount Amount Amount Amount
Particulars Particulars
` ` ` `
To Plant & Machinery A/c 3,000 By Land & Building A/c 5,000
To R.D.D. A/c 2,250 By Stock A/c 4,500
To Partner’s Capital A/c
(Profit on Revaluation)
Madhu 2,550
Amar 1,700 4,250
9,500 9,500
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Target Publications Pvt. Ltd. Std. XII (Commerce): Book-Keeping & Accountancy
Partner’s Capital Account
Dr. Cr.
Madhu Amar Vasant Madhu Amar Vasant
Particulars Particulars
` ` ` ` ` `
By Balance b/d 35,000 35,000 –
By Bank A/c – – 15,000
By Goodwill A/c 3,000 2,000 –
By Profit & Loss
To Balance c/d 40,550 38,700 15,000 Adjustment A/c 2,550 1,700 –
40,550 38,700 15,000 40,550 38,700 15,000

Balance Sheet as on 31st Mar, 2012

Amount Amount Amount Amount
Liabilities Assets
` ` ` `
Capital Sundry Debtors 45,000
Madhu 40,550 Less: R.D.D. (5%) 2,250 42,750
Amar 38,700 Land & Building 25,000
Vasant 15,000 94,250 Add: Appreciation 5,000 30,000
Sundry Creditors 62,000 Stock 20,500
Add: Increase 4,500 25,000
Plant & Machinery 35,000
Less: Depreciation 3,000 32,000
Furniture & Fixture 1,500
Cash at Bank 25,000
1,56,250 1,56,250
[Note: If future share of incoming partner is given in question, then sacrificing ratio will be same as old ratio]

Solution to Practice Q.3.: In the Books of Firm

Profit and Loss Adjustment Account
Dr. Cr.
Amount Amount Amount Amount
Particulars Particulars
` ` ` `
To Depreciation A/c By Land & Building A/c 9,000
Stock (10%) 680
Machinery (10%) 2,000 2,680
To R.D.D. A/c 300
To Partner’s Capital A/c
(Profit on Revaluation)
Arun 3,010
Varun 3,010 6,020
9,000 9,000
Partner’s Capital Account
Dr. Cr.
Arun Varun Sunil Arun Varun Sunil
Particulars Particulars
` ` ` ` ` `
By Balance b/d 9,000 7,000 –
By General
Reserve A/c 4,500 4,500 –
By Cash A/c – – 10,000

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Target Publications Pvt. Ltd. Chapter 03: Reconstitution of Partnership (Admission of Partner)
By Goodwill A/c 4,000 4,000 –
By Profit & Loss
To Balance c/d 20,510 18,510 10,000 Adjustment A/c 3,010 3,010 –
20,510 18,510 10,000 20,510 18,510 10,000
Cash Account
Dr. Cr.
Amount Amount
Particulars Particulars
` `
To Balance b/d 2,500
To Sunil’s Capital A/c 10,000
To Goodwill A/c 8,000 By Balance c/d 20,500
20,500 20,500
Goodwill Account
Dr. Cr.
Amount Amount
Particulars Particulars
` `
To Arun’s Capital A/c 4,000 By Cash A/c 8,000
To Varun’s Capital A/c 4,000
8,000 8,000
st
Balance Sheet as on 1 Apr, 2012
Amount Amount Amount Amount
Liabilities Assets
` ` ` `
Capital Stock 6,800
Arun 20,510 Less: Depreciation (10%) 680 6,120
Varun 18,510 Motor Van 4,200
Sunil 10,000 49,020 Machinery 8,000
Sundry Creditors 21,000 Less: Depreciation (10%) 2,000 6,000
Bills Payable 8,500 Land & Building 20,000
Add: Appreciation 9,000 29,000
Furniture 7,000
Sundry Debtor 6,000
Less: R.D.D.(5%) 300 5,700
Cash in Hand 20,500
78,520 78,520
[Note: If future share of incoming partner is given in question, then sacrificing ratio will be same as old ratio.]

Solution to Practice Q.4.: In the Books of firm

Profit and Loss Adjustment Account
Dr. Cr.
Amount Amount Amount Amount
Particulars Particulars
` ` ` `
To R.D.D. A/c 1,000 By Machinery A/c 13,333
To Building A/c 3,667
To Partner’s Capital A/c
(Profit on Revaluation)
Ramesh 6,500
Suresh 2,166 8,666
13,333 13,333

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Target Publications Pvt. Ltd. Std. XII (Commerce): Book-Keeping & Accountancy
Partner’s Capital Account
Dr. Cr.
Ramesh Suresh Mahesh Ramesh Suresh Mahesh
Particulars Particulars
` ` ` ` ` `
By Balance b/d 40,000 20,000 –
To Balance c/d 40,000 20,000 15,000 By Cash A/c – – 15,000
40,000 20,000 15,000 40,000 20,000 15,000
Partner’s Current Account
Dr. Cr.
Ramesh Suresh Ramesh Suresh
Particulars Particulars
` ` ` `
To Profit & Loss A/c 9,000 3,000 By Balance b/d 4,000 6,000
By General Reserve A/c 5,250 1,750
By Profit & Loss Adjustment A/c 6,500 2,166
To Balance c/d 12,750 8,916 By Goodwill A/c 6,000 2,000
21,750 11,916 21,750 11,916
Cash Account
Dr. Cr.
Amount Amount
Particulars Particulars
` `
To Balance b/d 9,000
To Mahesh’s Capital A/c 15,000
To Goodwill A/c 8,000 By Balance c/d 32,000
32,000 32,000
st
Balance Sheet as on 1 Apr, 2012
Amount Amount Amount Amount
Liabilities Assets
` ` ` `
Capital Stock 8,000
Ramesh 40,000 Machinery 20,000
Suresh 20,000 Add: Revaluation 13,333 33,333
Mahesh 15,000 75,000 Land & Building 22,000
Sundry Creditors 12,000 Less: Revaluation 3,667 18,333
Current A/c Sundry Debtors 18,000
Ramesh 12,750 Less: R.D.D. 1,000 17,000
Suresh 8,916 21,666 Cash 32,000
1,08,666 1,08,666

Solution to Practice Q.5.: In the Books of Firm

Profit and Loss Adjustment Account
Dr. Cr.
Amount Amount Amount Amount
Particulars Particulars
` ` ` `
To Plant & Machinery A/c 1,000 By Sundry Creditor A/c 800
To Stock A/c 300
To Bills Receivable A/c 500 By Partner’s Capital A/c
(Loss on Revaluation)
Manoj 500
Sunil 500 1,000
1,800 1,800
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Target Publications Pvt. Ltd. Chapter 03: Reconstitution of Partnership (Admission of Partner)
Partner’s Capital Account
Dr. Cr.
Manoj Sunil Raj Manoj Sunil Raj
Particulars Particulars
` ` ` ` ` `
To Bills Receivable A/c 6,500 – – By Balance b/d 30,000 20,000 –
To Profit & Loss By General Reserve A/c
Adjustment A/c 500 500 – By Cash A/c – – 8,000
By Goodwill A/c 3,500 3,500 –
To Balance c/d 31,000 27,500 8,000
38,000 28,000 8,000 38,000 28,000 8,000
Cash Account
Dr. Cr.
Amount Amount
Particulars Particulars
` `
To Balance b/d 7,000
To Raj’s Capital A/c 8,000
To Goodwill A/c 7,000 By Balance c/d 22,000
22,000 22,000
Goodwill Account
Dr. Cr.
Amount Amount
Particulars Particulars
` `
To Manoj’s Capital A/c 3,500 By Cash A/c 7,000
To Sunil’s Capital A/c 3,500
7,000 7,000
st
Balance Sheet as on 1 Apr, 2012
Amount Amount Amount Amount
Liabilities Assets
` ` ` `
Capital Plant & Machinery 24,000
Manoj 31,000 Less: Revaluation 1,000 23,000
Sunil 27,500 Stock 14,000
Raj 8,000 66,500 Less: Revaluation 300 13,700
Sundry Creditors 4,000 Furniture 10,000
Less: Written Off 20% 800 3,200 Sundry Debtors 8,000
Bills Payable 7,000 Cash 22,000
76,700 76,700
[Note: If future share of incoming partner is given in question, then sacrificing ratio will be same as old ratio]
Solution to Practice Q.6.: In the Books of Firm
Profit and Loss Adjustment Account
Dr. Cr.
Amount Amount Amount Amount
Particulars Particulars
` ` ` `
To Equipments A/c 5,000 By R.D.D. A/c 5,500
By Premises A/c 9,500
To Partner’s Capital A/c By Creditors A/c 1,000
(Profit on Revaluation)
Snehal 5,500
Meenal 5,500 11,000
16,000 16,000

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Target Publications Pvt. Ltd. Std. XII (Commerce): Book-Keeping & Accountancy
Partner’s Capital Account
Dr. Cr.
Snehal Meenal Komal Snehal Meenal Komal
Particulars Particulars
` ` ` ` ` `
By Balance b/d 80,000 45,000 −
By General Reserve
A/c 10,000 10,000 −
By Cash A/c − − 50,000
By Goodwill A/c 20,000 20,000 −
To Profit & Loss
To Balance c/d 1,15,500 80,500 50,000 Adjustment A/c 5,500 5,500 −
1,15,500 80,500 50,000 1,15,500 80,500 50,000
Balance Sheet as on 1st Apr, 2013
Amount Amount Amount Amount
Liabilities Assets
` ` ` `
Capital Premises 20,500
Snehal 1,15,500 Add: Revaluation 9,500 30,000
Meenal 80,500 Equipments 5,000
Komal 50,000 2,46,000 Less: Written off 5,000 −
Investments 10,500
Debtors 1,10,000
Less: R.D.D. (5%) 5,500 1,04,500
Bills Receivable 18,000
Cash at Bank 43,000
Goodwill 40,000
2,46,000 2,46,000
st
[Note: Amount provided in the Balance sheet as on 31 Mar, 2013 = ` 11,000 therefore, written back excess
R.D.D. ` 5,500 to the Profit and Loss Adjustment Account.]
Solution to Practice Q.7.: In the Books of Firm
Profit and Loss Adjustment Account
Dr. Cr.
Amount Amount Amount Amount
Particulars Particulars
` ` ` `
To Furniture & Fixtures A/c 1,000 By Business Premises A/c 30,000
To R.D.D. A/c 1,000 By Stock A/c 2,000
To Partner’s Capital A/c
(Profit on Revaluation)
Baba 18,000
Kaka 12,000 30,000
32,000 32,000
Partner’s Current Account
Dr. Cr.
Baba Kaka Anna Baba Kaka Anna
Particulars Particulars
` ` ` ` ` `
By Balance b/d 1,200 1,400 –
By Goodwill A/c 6,000 4,000 –
By Profit & Loss
To Balance c/d 25,200 17,400 – Adjustment A/c 18,000 12,000 –
25,200 17,400 – 25,200 17,400 –

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Target Publications Pvt. Ltd. Chapter 03: Reconstitution of Partnership (Admission of Partner)
Balance Sheet as on 1st Apr, 2013
Amount Amount Amount Amount
Liabilities Assets
` ` ` `
Capital Business Premises 1,40,000
Baba 1,00,000 Add: Appreciation 30,000 1,70,000
Kaka 60,000 Furniture & Fixture 11,400
Anna 40,000 2,00,000 Less: Depreciation 1,000 10,400
Current A/c Stock 27,000
Baba 25,200 Add: Increase 2,000 29,000
Kaka 17,400 42,600 Debtors 9,100
Creditors 6,000 Less: R.D.D. 1,000 8,100
Bank 31,100
2,48,600 2,48,600
[Note: If future share of incoming partner is given in question, then sacrificing ratio will be same as old ratio]
Solution to Practice Q.8.: In the Books of Firm
Profit and Loss Adjustment Account
Dr. Cr.
Amount Amount Amount Amount
Particulars Particulars
` ` ` `
To Depreciation A/c By Land & Building A/c 11,000
Plant & Machinery 1,800
To Stock A/c 200
To Interest on Bank Loan A/c 200
To Partner’s Capital A/c
(Profit on Revaluation)
Ajay 5,280
Vijay 3,520 8,800
11,000 11,000
Partner’s Capital Account
Dr. Cr.
Ajay Vijay Vishal Ajay Vijay Vishal
Particulars Particulars
` ` ` ` ` `
To Bank A/c 2,100 1,400 – By Balance b/d 18,000 16,000 –
By Goodwill A/c 4,200 2,800 –
By Bank A/c – – 12,000
By Profit & Loss A/c 3,600 2,400 –
By Profit & Loss
To Balance c/d 28,980 23,320 12,000 Adjustment A/c 5,280 3,520 –
31,080 24,720 12,000 31,080 24,720 12,000
Bank Account
Dr. Cr.
Amount Amount
Particulars Particulars
` `
To Balance b/d 2,600 By Bank Loan A/c 3,000
To Goodwill A/c 7,000 By Interest on Bank Loan A/c 200
To Vishal’s Capital A/c 12,000 By Ajay’s Capital A/c 2,100
By Vijay’s Capital A/c 1,400
By Balance c/d 14,900
21,600 21,600

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Target Publications Pvt. Ltd. Std. XII (Commerce): Book-Keeping & Accountancy
Goodwill Account
Dr. Cr.
Amount Amount
Particulars Particulars
` `
To Ajay’s Capital A/c 4,200 By Bank A/c 7,000
To Vijay’s Capital A/c 2,800
7,000 7,000

Balance Sheet as on 1st Apr, 2012

Amount Amount Amount Amount
Liabilities Assets
` ` ` `
Capital Plant & Machinery 18,000
Ajay 28,980 Less: Depreciation (10%) 1,800 16,200
Vijay 23,320 Stock 4,000
Vishal 12,000 64,300 Less: Revaluation 200 3,800
Sundry Creditors 7,000 Land & Building 16,000
Bills Payable 4,000 Add: Revaluation 11,000 27,000
Debtor 10,000
Bills Receivable 3,400
Bank 14,900
75,300 75,300

[Note: If future share of incoming partner is given in question, then sacrificing ratio will be same as old ratio]

Solution to Practice Q.9.: In the Books of Firm

Profit and Loss Adjustment Account
Dr. Cr.
Amount Amount Amount Amount
Particulars Particulars
` ` ` `
To Stock A/c 3,500 By Building A/c 4,350
To R.D.D. A/c 4,000 By Creditors A/c 502
To Claim for Damages 1,000
By Partner’s Capital A/c
(Loss on Revaluation)
Ram 912
Shyam 1,368
Bharat 1,368 3,648
8,500 8,500

Partner’s Capital Account

Dr. Cr.
Ram Shyam Bharat Laxman Ram Shyam Bharat Laxman
Particulars Particulars
` ` ` ` ` ` ` `
To Goodwill A/c 7,500 11,250 11,250 10,000 By Balance b/d 20,000 27,000 30,000 –
To Profit & Loss By General
Adjustment A/c 912 1,368 1,368 – Reserve A/c 4,000 6,000 6,000 –
By Bank A/c – – – 25,000
To Balance c/d 25,588 35,382 38,382 15,000 By Goodwill A/c 10,000 15,000 15,000 –
34,000 48,000 51,000 25,000 34,000 48,000 51,000 25,000

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Target Publications Pvt. Ltd. Chapter 03: Reconstitution of Partnership (Admission of Partner)
Bank Account
Dr. Cr.
Amount Amount
Particulars Particulars
` `
To Balance b/d 22,000
To Laxman’s Capital A/c 25,000 By Balance c/d 47,000

47,000 47,000

Goodwill Account
Dr. Cr.
Amount Amount
Particulars Particulars
` `
To Ram’s Capital A/c 10,000 By Ram’s Capital A/c 7,500
To Shyam’s Capital A/c 15,000 By Shyam’s Capital A/c 11,250
To Bharat’s Capital A/c 15,000 By Bharat’s Capital A/c 11,250
By Laxman’s Capital A/c 10,000

40,000 40,000
Balance Sheet as on 1st Apr, 2013
Amount Amount Amount Amount
Liabilities Assets
` ` ` `
Capital A/c Bills Receivable 4,500
Ram 25,588 Trade Debtors 60,000
Shyam 35,382 Less: New R.D.D. 4,000 56,000
Bharat 38,382 Stock in Trade 35,000
Laxman 15,000 1,14,352 Less: Depreciation (10%) 3,500 31,500
Bills Payable 10,000 Furniture 2,000
Trade Creditors 30,000 Building 29,000
Less: Decrease 502 29,498 Add: Appreciation (15%) 4,350 33,350
Loan from ‘Usha’ 20,000 Cash in Hand 500
Claim for Damages 1,000 Cash at Bank 47,000

1,74,850 1,74,850

Solution to Practice Q.10.: In the books of Firm

Profit and Loss Adjustment Account
Dr. Cr.
Amount Amount Amount Amount
Particulars Particulars
` ` ` `
To Plant & Machinery A/c 4,000 By Land & Building A/c 7,000
To Provision for Doubtful By Stock A/C 1,000
Debts A/c 700
To Furniture & Fixtures A/c 1,000
To Partner’s Capital A/c
(Profit on Revaluation)
Santosh 1,380
Ritu 920 2,300

8,000 8,000

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Target Publications Pvt. Ltd. Std. XII (Commerce): Book-Keeping & Accountancy
Partner’s Capital Account
Dr. Cr.
Santosh Ritu Mitali Santosh Ritu Mitali
Particulars Particulars
` ` ` ` ` `
To Bank A/c 3,000 2,000 – By balance b/d 32,000 22,000 –
By General Reserve
A/c 7,200 4,800 –
By Goodwill A/C 6,000 4,000 –
By Bank A/C – – 12,000
By Profit & Loss
To Balance c/d 43,580 29,720 12,000 Adjustment A/c 1,380 920 –

46,580 31,720 12,000 46,580 31,720 12,000

Balance Sheet as on 1st Apr, 2012

Amount Amount Amount Amount

Liabilities Assets
` ` ` `
Sundry Creditors 10,000 Cash at Bank 35,000
Capital Sundry Debtors 7,000
Santosh 43,580 Less: R.D.D. 700 6,300
Ritu 29,720 Land & Building 25,000
Mitali 12,000 85,300 Add: Revaluation 7,000 32,000
Stock 11,000
Add: Revaluation 1,000 12,000
Plant & Machinery 12,000
Less: Revaluation 4,000 8,000
Furniture & Fixtures 3,000
Less: Revaluation 1,000 2,000

95,300 95,300

Solution to Practice Q.11.: In the Books of Firm

Profit and Loss Adjustment Account
Dr. Cr.
Amount Amount Amount Amount
Particulars Particulars
` ` ` `
To Outstanding Legal By Land & Building A/c 1,900
Expenses A/c 650
To Reserve for doubtful debts
A/c 1,000
To Plant & Machinery A/c 4,500 By Partner's Capital A/c
(Loss on revaluation)
Raman 2,550
Naman 1,700 4,250

6,150 6,150

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Target Publications Pvt. Ltd. Chapter 03: Reconstitution of Partnership (Admission of Partner)
Partner’s Capital Account
Dr. Cr.
Raman Naman Shaman Raman Naman Shaman
Particulars Particulars
` ` ` ` ` `
To Goodwill A/c 7,200 4,800 3,000 By Balance b/d 50,000 40,000 –
To Profit & Loss By General Reserve
Adjustment A/c 2,550 1,700 – A/c 2,400 1,600 –
By Profit & Loss
A/c 3,600 2,400 –
By Cash A/c – – 60,000
To Balance c/d 55,250 43,500 57,000 By Goodwill A/c 9,000 6,000 –
65,000 50,000 60,000 65,000 50,000 60,000
Balance Sheet as on 1st Apr, 2012
Amount Amount Amount Amount
Liabilities Assets
` ` ` `
Creditors 34,000 Land & Building 38,000
Bills Payable 20,000 Add: Appreciation 1,900 39,900
Outstanding Legal Expenses 650 Plant & Machinery 30,000
Capital Less: Depreciation 4,500 25,500
Raman 55,250 Sundry Debtors 40,000
Naman 43,500 Less: Reserve for Doubtful
Shaman 57,000 1,55,750 Debts 1,000 39,000
Closing Stock 26,000
Cash in Hand 80,000
2,10,400 2,10,400

Solution to Practice Q.12.: In the Books of Firm

Profit and Loss Adjustment Account
Dr. Cr.
Amount Amount Amount Amount
Particulars Particulars
` ` ` `
To Depreciation A/c By Building A/c 4,000
Stock (5%) 350 By R.D.D. A/c 1,000
Plant & Machinery (5%) 900 1,250 By Creditor A/c 1,000
To Interest on Bank Loan 350
To Partner’s Capital A/c
(Profit on Revaluation)
Suryakant 2,200
Chandrakant 2,200 4,400
6,000 6,000
Partner’s Capital Account
Dr. Cr.
Suryakant Chandrakant Tarachand Suryakant Chandrakant Tarachand
Particulars Particulars
` ` ` ` ` `
By Balance b/d 18,000 22,000 –
By General
Reserve A/c 6,000 6,000 –
By Cash A/c – – 12,000
By Goodwill 3,000 3,000 –
A/c
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Target Publications Pvt. Ltd. Std. XII (Commerce): Book-Keeping & Accountancy
By Bank Loan
A/c – 6,350 –
By Profit & Loss
To Balance c/d 29,200 39,550 12,000 Adjustment A/c 2,200 2,200 –
29,200 39,550 12,000 29,200 39,550 12,000
Cash Account
Dr. Cr.
Amount Amount
Particulars Particulars
` `
To Balance b/d 3,000
To Tarachand’s Capital A/c 12,000 By Balance c/d 15,000
15,000 15,000
Goodwill Account
Dr. Cr.
Amount Amount
Particulars Particulars
` `
To Suryakant’s Capital A/c 3,000
To Chandrakant’s Capital A/c 3,000 By Balance c/d 6,000
6,000 6,000

Balance Sheet as on 1st Apr, 2012

Amount Amount Amount Amount
Liabilities Assets
` ` ` `
Capital Building 20,000
Suryakant 29,200 Add: Appreciation (20%) 4,000 24,000
Chandrakant 39,550 Plant & Machinery 18,000
Tarachand 12,000 80,750 Less: Depreciation (5%) 900 17,100
Sundry Creditors 8,000 Stock 7,000
Less: Written Off 1,000 7,000 Less: Depreciation (5%) 350 6,650
Furniture 8,000
Debtors 11,000
Cash 15,000
Goodwill 6,000
87,750 87,750

Solution to Practice Q.13.: In the Books of Firm

Revaluation Account
Dr. Cr.
Amount Amount Amount Amount
Particulars Particulars
` ` ` `
To Depreciation A/c By Stock A/c 1,000
Furniture 300 By Creditors A/c 1,000
By Rent Receivable A/c 400
To Partner’s Captial A/c
(Profit on Revaluation)
Sohan 1,400
Mohan 700 2,100
2,400 2,400
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Target Publications Pvt. Ltd. Chapter 03: Reconstitution of Partnership (Admission of Partner)
Partner’s Capital Account
Dr. Cr.
Sohan Mohan Rohan Sohan Mohan Rohan
Particulars Particulars
` ` ` ` ` `
To Profit & Loss A/c 4,000 2,000 – By Balance b/d 40,000 30,000 –
By General Reserve A/c 8,000 4,000 –
By Cash A/c – – 12,000
By Goodwill A/c 6,000 3,000 –
By Profit & Loss
To Balance c/d 51,400 35,700 12,000 Adjustment A/c 1,400 700 –
55,400 37,700 12,000 55,400 37,700 12,000
st
Balance Sheet as on 1 Apr, 2012
Amount Amount Amount Amount
Liabilities Assets
` ` ` `
Capital Building 20,000
Sohan 51,400 Furniture 6,000
Mohan 35,700 Less: Depreciation (5%) 300 5,700
Rohan 12,000 99,100 Stock 12,000
Creditors 16,000 Add: Revaluation 1,000 13,000
Less: Written Off 1,000 15,000 Debtors 60,000
Less: New R.D.D. (50% of
General Reserve) 12,000 48,000
Rent Receivable 400
Cash 27,000
1,14,100 1,14,100
[Note: If future share of Incoming partner is given in question, then sacrificing ratio will be same as old ratio.]
Solution to Practice Q.14.: In the Books of Firm
Profit and Loss Adjustment Account
Dr. Cr.
Amount Amount Amount Amount
Particulars Particulars
` ` ` `
To Goodwill A/c 20,000 By Buildings A/c 4,350
To Stock A/c 3,500 By Creditors' A/c 1,000
To Provision for Bad Debts
A/c 3,500
To Provision for Damages A/c 1,000 By Partner's Capital A/c
(Loss on revaluation)
A 5,662
B 8,494
C 8,494 22,650
28,000 28,000
Partner’s Capital Account
Dr. Cr.
A B C D A B C D
Particulars Particulars
` ` ` ` ` ` ` `
To Profit & Loss By Balance b/d 20,000 27,000 30,000 –
Adjustment A/c 5,662 8,494 8,494 – By General
Reserve A/c 4,000 6,000 6,000 –
To Balance c/d 18,338 24,506 27,506 30,000 By Cash A/c – – – 30,000
24,000 33,000 36,000 30,000 24,000 33,000 36,000 30,000

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Target Publications Pvt. Ltd. Std. XII (Commerce): Book-Keeping & Accountancy
Balance Sheet as on 1st Apr, 2012
Amount Amount Amount Amount
Liabilities Assets
` ` ` `
Creditors 73,000 Cash 42,000
Less: written off 1,000 72,000 Bills Receivable 4,500
Bank Overdraft 50,000 Trade Debtors 59,000
Provision for damages 1,000 Less: Provision for bad
Capital debts 3,500 55,500
A 18,338 Stock 35,000
B 24,506 Less: Revaluation 3,500 31,500
C 27,506 Furniture 2,000
D 30,000 1,00,350 Buildings 43,500
Add: Appreciation 4,350 47,850
Goodwill 60,000
Less: Revaluation 20,000 40,000
2,23,350 2,23,350

Solution to Practice Q.15.: In the Books of Firm

Profit and Loss Adjustment Account
Dr. Cr.
Amount Amount Amount Amount
Particulars Particulars
` ` ` `
To Stock A/c 500 By Building A/c 3,600
By R.D.D. A/c 1,100
To Partner’s Capital A/c By Mr. Pandit’s Loan A/c 200
(Profit on Revaluation)
Arjun 3,300
Pandit 1,100 4,400
4,900 4,900
Partner’s Capital Account
Dr. Cr.
Arjun Pandit Raman Arjun Pandit Raman
Particulars Particulars
` ` ` ` ` `
By Balance b/d 22,000 17,000 –
By Profit & Loss
A/c 5,250 1,750 –
By Bank A/c – – 8,000
By Goodwill A/c 16,875 5,625 –
By Profit & Loss
To Balance c/d 47,425 25,475 8,000 Adjustment A/c 3,300 1,100 –
47,425 25,475 8,000 47,425 25,475 8,000
Bank Account
Dr. Cr.
Amount Amount
Particulars Particulars
` `
To Balance b/d 5,000 By Mr. Pandit’s Loan A/c 1,800
To Raman’s Capital A/c 8,000
By Balance c/d 11,200
13,000 13,000

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Target Publications Pvt. Ltd. Chapter 03: Reconstitution of Partnership (Admission of Partner)
Goodwill Account
Dr. Cr.
Amount Amount
Particulars Particulars
` `
To Arjun’s Capital A/c 16,875
To Pandit’s Capital A/c 5,625 By Balance c/d 22,500
22,500 22,500

Balance Sheet as on 1st Apr, 2012

Amount Amount Amount Amount
Liabilities Assets
` ` ` `
Capital Building 18,000
Arjun 47,425 Add: Appreciation 20% 3,600 21,600
Pandit 25,475 Plant & Machinery 14,000
Raman 8,000 80,900 Sundry Debtors 9,000
Sundry Creditors 12,000 Less: R.D.D. 900 8,100
Stock 9,000
Less: Revaluation 500 8,500
Loose Tools 7,000
Cash A/c 11,200
Goodwill 22,500
92,900 92,900

[Note: If future share of incoming partner is given in question, then sacrificing ratio will be same as old ratio]

Solution to Practice Q.16.: In the Books of Firm

Revaluation Account
Dr. Cr.
Amount Amount Amount Amount
Particulars Particulars
` ` ` `
To R.D.D. A/c 500
To Stock A/c 1,000
To Depreciation A/c By Partner’s Capital A/c
Building (5%) 2,200 (Loss on Revaluation)
Ketan 2,220
Chetan 1,480 3,700
3,700 3,700

Partner’s Capital Account

Dr. Cr.
Ketan Chetan Ratan Ketan Chetan Ratan
Particulars Particulars
` ` ` ` ` `
To Plant A/c 15,000 – – By Balance b/d 72,000 48,000 –
To Goodwill A/c 30,000 20,000 10,000 By General
To Profit & Loss Reserve A/c 6,000 4,000 –
Adjustment A/c 2,220 1,480 – By Bank A/c – – 15,900
By Goodwill A/c 36,000 24,000 –
To Balance c/d 66,780 54,520 5,900
1,14,000 76,000 15,900 1,14,000 76,000 15,900

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Target Publications Pvt. Ltd. Std. XII (Commerce): Book-Keeping & Accountancy
Balance Sheet as on 1st Apr, 2012
Amount Amount Amount Amount
Liabilities Assets
` ` ` `
Capital Sundry Debtors 45,000
Ketan 66,780 Less: R.D.D. 1,000 44,000
Chetan 54,520 Stock 17,000
Ratan 5,900 1,27,200 Less: Decrease 1,000 16,000
Sundry Creditors 30,000 Investment 24,000
Plant 30,000
Less: Taken over by Ketan 15,000 15,000
Building 44,000
Less: Depreciation (5%) 2,200 41,800
Bank 16,400
1,57,200 1,57,200

Solution to Practice Q.17.: In the Books of Firm

Journal Entries
Debit Credit
Date Particulars L.F.
` `
1. Cash A/c Dr. 25,000
To P's Capital A/c 25,000
(Being capital introduced by new partner)
2. Cash A/c Dr. 19,500
To P's Capital A/c 19,500
(Being proportionate amount of Goodwill brought in cash by P)
3. P's Capital A/c Dr. 19,500
To X's Capital A/c 6,500
To Y's Capital A/c 6,500
To Z's Capital A/c 6,500
(Being goodwill brought in by P transferred to old partners)
4. Bank Overdraft A/c Dr. 8,000
To X's Capital A/c 8,000
(Being bank overdraft taken over by X)
5. Z’s Capital A/c Dr. 12,000
Profit & Loss Adjustment A/c Dr. 1,000
To Debtors A/c 13,000
(Being debtors revalued and taken over by Z)
6. Stock A/c Dr. 2,000
To Profit & Loss Adjustment A/c 2,000
(Being stock revalued)
7. Profit & Loss Adjustment A/c Dr. 3,000
To Buildings A/c 3,000
To Machinery A/c 4,000
(Being Buildings and Machinery depreciated by 15% and 10%
respectively)
8. X's Capital A/c Dr. 2,000
Y's Capital A/c Dr. 2,000
Z's Capital A/c Dr. 2,000
To Profit & Loss Adjustment A/c 6,000
(Being loss on revaluation transferred to capital accounts)
Total: 96,000 96,000

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Target Publications Pvt. Ltd. Chapter 03: Reconstitution of Partnership (Admission of Partner)
Balance Sheet as on 31st Mar, 2012
Amount Amount Amount Amount
Liabilities Assets
` ` ` `
Creditors 5,000 Machinery 40,000
Capitals Less: Depreciation 10% 4,000 36,000
X 52,500 Buildings 20,000
Y 24,500 Less: Depreciation 15% 3,000 17,000
Z 12,500 Stock 10,000
P 25,000 1,14,500 Add: Appreciation 2,000 12,000
Bills Receivable 6,500
Cash 48,000
1,19,500 1,19,500

Solution to Practice Q.18.: In the Books of Firm

Profit and Loss Adjustment Account
Dr. Cr.
Amount Amount Amount Amount
Particulars Particulars
` ` ` `
To R.D.D. A/c 250 By Building A/c 1,100
To Stock A/c 1,000
By Partner’s Capital A/c
(Loss on Revaluation)
Ranade 90
Kanade 60 150
1,250 1,250

Partner’s Capital Account

Dr. Cr.
Ranade Kanade Hegade Ranade Kanade Hegade
Particulars Particulars
` ` ` ` ` `
To Profit & Loss By Balance b/d 36,000 24,000 –
Adjustment A/c 90 60 – By General
Reserve A/c 3,000 2,000 –
By Bank A/c – – 18,650
To Balance c/d 44,310 29,540 18,650 By Goodwill A/c 5,400 3,600 –
44,400 29,600 18,650 44,400 29,600 18,650
Balance Sheet as on 1st Apr, 2012
Amount Amount Amount Amount
Liabilities Assets
` ` ` `
Capital Sundry Debtors 22,500
Ranade 44,310 Less: R.D.D. 500 22,000
Kanade 29,540 Stock 8,500
Hegade 18,650 92,500 Less: Decrease 1,000 7,500
Sundry Creditors 15,000 Investments 12,000
Plant 15,000
Building 22,000
Add: Appreciation 5% 1,100 23,100
Bank 27,900
1,07,500 1,07,500
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Target Publications Pvt. Ltd. Std. XII (Commerce): Book-Keeping & Accountancy
Solution to Practice Q.19.: In the Books of Firm
Profit and Loss Adjustment Account
Dr. Cr.
Amount Amount Amount Amount
Particulars Particulars
` ` ` `
To Depreciation A/c
Machinery (10%) 4,800
Building (10%) 11,400 16,200
To R.D.D. A/c 3,000
To Bills Receivable A/c 2,400 By Partner’s Capital A/c
(Loss on Revaluation)
Veena 10,800
Leela 10,800 21,600
21,600 21,600
Partner’s Capital Account
Dr. Cr.
Veena Leela Asha Veena Leela Asha
Particulars Particulars
` ` ` ` ` `
To Bills Receivable By Balance b/d 90,000 60,000 –
A/c 21,600 – – By General
To Profit & Loss Reserve A/c 18,000 18,000 –
Adjustment A/c 10,800 10,800 – By Bank A/c – – 80,000
By Current A/c 44,400 52,800 –
To Balance c/d 1,20,000 1,20,000 80,000
1,52,400 1,30,800 80,000 1,52,400 1,30,800 80,000
Balance Sheet as on 1st Apr, 2012
Amount Amount Amount Amount
Liabilities Assets
` ` ` `
Capital A/c Debtors 62,000
Veena 1,20,000 Less: R.D.D. 5,000 57,000
Leela 1,20,000 Building 1,14,000
Asha 80,000 3,20,000 Less: Depreciation (10%) 11,400 1,02,600
Sundry Creditors 1,80,000 Machinery 48,000
Less: Depreciation (10%) 4,800 43,200
Cash at Bank 2,00,000
Current A/c
Veena 44,400
Leela 52,800 97,200
5,00,000 5,00,000

Solution to Practice Q.20.: In the Books of Firm

Profit and Loss Adjustment Account
Dr. Cr.
Amount Amount Amount Amount
Particulars Particulars
` ` ` `
To Land & Building A/c 1,750
To Plant & Machinery A/c 1,225
To Stock A/c 1,435

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Target Publications Pvt. Ltd. Chapter 03: Reconstitution of Partnership (Admission of Partner)
To R.D.D. A/c 1,575 By Partner’s Capital A/c
(Loss on Revaluation)
Kale 3,591
Gore 2,394 5,985
5,985 5,985

Partner’s Capital Account

Dr. Cr.
Kale Gore Pandhare Kale Gore Pandhare
Particulars Particulars
` ` ` ` ` `
To Profit & Loss By Balance b/d 24,500 24,500 –
Adjustment A/c 3,591 2,394 – By General
To Cash A/c – 21,106 – Reserve A/c 3,000 2,000 –
By Cash A/c – – 10,000
By Goodwill A/c – 7,000 –
To Balance c/d 30,000 10,000 10,000 By Cash A/c 6,091 – –

33,591 33,500 10,000 33,591 33,500 10,000

Balance Sheet as on 1st Apr, 2014

Amount Amount Amount Amount
Liabilities Assets
` ` ` `
Capital Land & Building 17,500
Kale 30,000 Less: Depreciation 1,750 15,750
Gore 10,000 Plant & Machinery 24,500
Pandhare 10,000 50,000 Less: Depreciation (5%) 1,225 23,275
Creditors 38,000 Furniture 1,050
Bills Payable 400 Stock 14,350
Less: Written Off (10%) 1,435 12,915
Debtors 31,500
Less: New R.D.D. (5%) 1,575 29,925
Cash 5,485

88,400 88,400

Solution to Practice Q.21.: In the Books of Firm

Profit and Loss Adjustment Account
Dr. Cr.
Amount Amount Amount Amount
Particulars Particulars
` ` ` `
To Plant & Machinery A/c 7,000 By Land & Building A/c 10,000
To Furniture A/c 300 By Stock A/c 9,000
To R.D.D. A/c 4,500

To Partner’s Capital A/c

(Profit on Revaluation)
Sukhadeo 4,320
Hanumant 2,880 7,200

19,000 19,000

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Target Publications Pvt. Ltd. Std. XII (Commerce): Book-Keeping & Accountancy
Partner’s Capital Account
Dr. Cr.
Sukhadeo Hanumant Shakuntala Sukhadeo Hanumant Shakuntala
Particulars Particulars
` ` ` ` ` `
To Loan A/c 26,320 40,880 – By Balance b/d 70,000 70,000 –
By Bank A/c – – 30,000
By Goodwill A/c 6,000 4,000 –
By Profit & Loss
To Balance c/d 54,000 36,000 30,000 Adjustment A/c 4,320 2,880 –
80,320 76,880 30,000 80,320 76,880 30,000
st
Balance Sheet as on 1 Apr, 2011
Amount Amount Amount Amount
Liabilities Assets
` ` ` `
Capital Land & Building 50,000
Sukhadeo 54,000 Add: Appreciation 10,000 60,000
Hanumant 36,000 Plant & Machinery 70,000
Shakuntala 30,000 1,20,000 Less: Depreciation (10%) 7,000 63,000
Creditors 1,24,000 Furniture 3,000
Loan from Partners Less: Depreciation (10%) 300 2,700
Sukhadeo 26,320 Stock 41,000
Hanumant 40,880 67,200 Add: Appreciation 9,000 50,000
Debtors 90,000
Less: R.D.D. (5%) 4,500 85,500
Cash at Bank 50,000
3,11,200 3,11,200
[Note: If future share of incoming partner is given in question, then sacrificing ratio will be same as old ratio]

Solution to Practice Q.22.: In the Books of firm

Profit and Loss Adjustment Account
Dr. Cr.
Amount Amount Amount Amount
Particulars Particulars
` ` ` `
To Building A/c 2,000
To Machinery A/c 4,000
To Debtors A/c 1,000 By Partners Capital A/c
(Loss on Revaluation)
Abhi 4,200
Anju 2,800 7,000
7,000 7,000
Partner’s Capital Account
Dr. Cr.
Abhi Anju Vivek Abhi Anju Vivek
Particulars Particulars
` ` ` ` ` `
To Profit & Loss By Balance b/d 45,000 30,000 –
Adjustment A/c 4,200 2,800 – By General
To Cash A/c 13,200 8,800 – Reserve A/c 15,000 10,000 –
By Cash A/c – – 15,000
To Balance c/d 45,000 30,000 15,000 By Goodwill A/c 2,400 1,600 –
62,400 41,600 15,000 62,400 41,600 15,000

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Target Publications Pvt. Ltd. Chapter 03: Reconstitution of Partnership (Admission of Partner)
Cash Account
Dr. Cr.
Amount Amount
Particulars Particulars
` `
To Balance c/d 4,000 By Abhi’s Capital A/c 13,200
To Vivek’s Capital A/c 15,000 By Anju’s Capital A/c 8,800
To Goodwill A/c 4,000
By Balance c/d 1,000

23,000 23,000

Goodwill Account
Dr. Cr.
Amount Amount
Particulars Particulars
` `
To Abhi’s Capital A/c 2,400 By Cash A/c 4,000
To Anju’s Capital A/c 1,600

4,000 4,000

Balance Sheet as on 1st Apr, 2014

Amount Amount Amount Amount
Liabilities Assets
` ` ` `
Capital A/c Building 30,000
Abhi 45,000 Less: Depreciation 2,000 28,000
Anju 30,000 Machinery 40,000
Vivek 15,000 90,000 Less: Depreciation (10%) 4,000 36,000
Bills Payable 8,000 Furniture 2,000
Creditors 12,000 Stock 16,000
Debtors 20,000
Less: New R.D.D. (5%) 1,000 19,000
Fixed Deposit in Bank 8,000
Cash in Hand 1,000

1,10,000 1,10,000

Solution to Practice Q.23.: In the Books of Firm

Profit and Loss Adjustment Account
Dr. Cr.
Amount Amount Amount Amount
Particulars Particulars
` ` ` `
To Interest on Ragini's Loan By Reserve for Doubtful
A/c 400 Debts A/c 900
To Stock A/c 2,000 By Building A/c 6,000
To Partner's Capital A/c
(Profit on revaluation)
Ragini 3,000
Radha 1,500 4,500

6,900 6,900

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Target Publications Pvt. Ltd. Std. XII (Commerce): Book-Keeping & Accountancy
Partner’s Capital Account
Dr. Cr.
Ragini Radha Rashmi Ragini Radha Rashmi
Particulars Particulars
` ` ` ` ` `
To Goodwill A/c 4,800 2,400 1,800 By Balance b/d 48,000 32,000 –
To Partners Current By General Reserve
A/c – 6,100 – A/c 6,000 3,000 –
By Profit & Loss A/c 2,000 1,000 –
By Cash A/c – – 20,000
By Stock A/c – – 4,000
By Goodwill A/c 6,000 3,000 –
By Profit & Loss
Adjustment A/c 3,000 1,500 –
By Partners Current
To Balance c/d 64,000 32,000 24,000 A/c 3,800 – 1,800
68,800 40,500 25,800 68,800 40,500 25,800

Balance Sheet as on 1st Apr, 2012

Amount Amount Amount Amount
Liabilities Assets
` ` ` `
Capitals Building 51,000
Ragini 64,000 Add: Appreciation 6,000 57,000
Radha 32,000 Stock 42,000
Rashmi 24,000 1,20,000 Add: brought by Rashmi 4,000
Current A/c Less: Reduction in value 2,000 44,000
Radha 6,100 Debtors 30,500
Sundry Creditors 44,000 Less: RDD 600 29,900
Ragini's Loan 6,500 Furniture 12,000
Office Equipments 7,000
Cash 21,100
Current Account
Ragini 3,800
Rashmi 1,800 5,600

1,76,600 1,76,600

Solution to Practice Q.24.: In the Books of Firm

Profit and Loss Adjustment Account
Dr. Cr.
Amount Amount Amount Amount
Particulars Particulars
` ` ` `
To Depreciation A/c By Land & Building A/c 2,000
Furniture (10%) 1,000
Stock (5%) 1,250 2,250
To R.D.D. A/c 1,750 By Partner’s Capital A/c
(Loss on Revaluation)
Ram 1,200
Krishna 800 2,000

4,000 4,000

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Target Publications Pvt. Ltd. Chapter 03: Reconstitution of Partnership (Admission of Partner)
Partner’s Capital Account
Dr. Cr.
Ram Krishna Hari Ram Krishna Hari
Particulars Particulars
` ` ` ` ` `
To Bank A/c 6,000 4,000 – By Balance b/d 50,000 40,000 –
To Profit & Loss By Bank A/c – – 25,000
Adjustment A/c 1,200 800 – By Reserve A/c 9,000 6,000 –
To Bank A/c 12,800 15,200 – By Goodwill A/c 6,000 4,000 –
To Balance c/d 45,000 30,000 25,000
65,000 50,000 25,000 65,000 50,000 25,000
st
Balance Sheet as on 1 Apr, 2013
Amount Amount Amount Amount
Liabilities Assets
` ` ` `
Capital Land & Building 40,000
Ram 45,000 Add: Appreciation 2,000 42,000
Krishna 30,000 Stock 25,000
Hari 25,000 1,00,000 Less: Depreciation (5%) 1,250 23,750
Creditors 30,000 Furniture 10,000
Bills Payable 5,000 Less: Depreciation (10%) 1,000 9,000
Debtors 35,000
Less: R.D.D. (5%) 1,750 33,250
Investments 20,000
Cash at Bank 7,000
1,35,000 1,35,000

Solution to Practice Q.25.: In the Books of Firm

Profit and Loss Adjustment Account
Dr. Cr.
Amount Amount Amount Amount
Particulars Particulars
` ` ` `
To Bills Receivable A/c 2,300
To Machinery A/c 4,800
To Building A/c 9,500
To R.D.D. A/c 3,000 By Partner's Capital A/c
(Loss on Revaluation)
Vishnu 9,800
Jay 9,800 19,600
19,600 19,600
Partner’s Capital Account
Dr. Cr.
Vishnu Jay Asha Vishnu Jay Asha
Particulars Particulars
` ` ` ` ` `
To Goodwill A/c 15,000 15,000 10,000 By Balance b/d 90,000 60,000 –
To Bills Receivable By General Reserve
A/c 20,700 – – A/c 18,000 18,000 –
To Profit & Loss By Bank A/c – – 70,000
Adjustment A/c 9,800 9,800 – By Goodwill A/c 10,000 10,000 –
By Partner's Current
To Balance c/d 1,05,000 1,05,000 70,000 A/c 32,500 41,800 10,000
1,35,500 1,14,800 70,000 1,35,500 1,14,800 70,000

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Target Publications Pvt. Ltd. Std. XII (Commerce): Book-Keeping & Accountancy
Balance Sheet as on 1st Apr, 2012
Amount Amount Amount Amount
Liabilities Assets
` ` ` `
Sundry Creditors 2,00,000 Cash at Bank 2,00,000
Capitals Debtors 72,000
Vishnu 1,05,000 Less: RDD 5,000 67,000
Jay 1,05,000 Building 95,000
Asha 70,000 2,80,000 Less: Depreciation 9,500 85,500
Machinery 48,000
Less: Depreciation 4,800 43,200
Current Accounts
Vishnu 32,500
Jay 41,800
Asha 10,000 84,300
4,80,000 4,80,000
Solution to Practice Q.26.: In the Books of Firm
Profit and Loss Adjustment Account
Dr. Cr.
Amount Amount Amount Amount
Particulars Particulars
` ` ` `
To Stock A/c 1,100
To Depreciation A/c
Building (10%) 800
Furniture (10%) 200 1,000 By Partner’s Capital A/c
(Loss on Revaluation)
Raja 1,400
Rani 700 2,100
2,100 2,100
Partner’s Capital Account
Dr. Cr.
Raja Rani Kanchan Raja Rani Kanchan
Particulars Particulars
` ` ` ` ` `
To Profit & Loss By Balance b/d 14,000 7,000 –
Adjustment A/c 1,400 700 – By General Reserve A/c 4,000 2,000 –
By Cash A/c – – 12,000
By Goodwill A/c 4,000 2,000 –
To Balance c/d 24,000 12,000 12,000 By Cash A/c 3,400 1,700 –
25,400 12,700 12,000 25,400 12,700 12,000
st
Balance Sheet as on 1 Apr, 2013
Amount Amount Amount Amount
Liabilities Assets
` ` ` `
Capital Building 8,000
Raja 24,000 Less: Depreciation (10%) 800 7,200
Rani 12,000 Furniture 2,000
Kanchan 12,000 48,000 Less: Depreciation (10%) 200 1,800
Bills Payable 3,000 Debtors 16,000
Creditors 10,000 Stock 11,000
Less: Decrease 1,100 9,900
Cash 26,100
61,000 61,000
[Note: If future share of incoming partner is given in question, then sacrificing ratio will be same as old ratio]
24