Micheal Vaz solutions for Book Keeping and Accountancy [English] 12 Standard HSC Maharashtra State Board chapter 3 - Reconstitution of Partnership (Admission of Partner) [Latest edition]

Answer in one sentence only.
What is meant by Reconstitution of partnership ?

Answer in one sentence only.
What is meant by admission of partner?

 Objective type questions.

 Select appropriate alternatives from those given below and rewrite the sentences.

 Excess of proportionate capital over actual capital represents.......................

Answer in one sentence only.
What is sacrifice ratio?

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What does the excess of debits over credits in profit and loss adjustment account indicate?

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What is revaluation account?

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In what proportion is general reserve distributed amongst the old partners?

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When is goodwill account raised in the books of the firm?

Answer in one sentence only.
How is sacrifice ratio calculated?

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Why a new partner is admitted?

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When is the ratio of sacrifice to be calculated?

Write the word/term or phrase which can substitute the following statement.
The account which shows change in the values of assets.

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Credit balance on revaluation account.

Write the word/term or phrase which can substitute the following statement. 
The proportion in which old partners make a sacrifice.

Write the word/term or phrase which can substitute the following statement.
Excess actual capital over proportionate capital.

Write the word/term or phrase which can substitute the following statement.
Name of intangible asset having a value.

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Account which is debited when new partner brings cash for his share of goodwill.

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

 Write a word/phrase/term which can substitute each of the following statement.

The proportion in which old partners make a sacrifice.

Write the word/term or phrase which can substitute  the following statement.
Account which is credited when goodwill is withdrawn by old partners.

Write the word/term or phrase which can substitute the following statement.
Profit and Loss Account appearing on the asset side of a balance sheet.

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Account which is opened to record the gains and losses on revaluation.

Write the word/term or phrase which can substitute the following statement.  
Change in the relationship between the partners.

Select the most appropriate answer from the alternative given below and rewrite the sentence.

Account is debited when unrecorded liability is brought into business.

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When goodwill is withdrawn by old partners ________________ a/c is credited.

Select the most appropriate answer from the alternative given below and rewrite the sentence.

Excess of proportionate capital over actual capital represents _________________.

Select the most appropriate answer from the alternative given below and rewrite the sentence.

The proportion in which old partners make a sacrifice is called _________________ ratio.

Select the most appropriate answer from the alternative given below and rewrite the sentence.

Jay, Vijay and Ajay are three partners sharing profits in 3:2:1. They decided to admit Sanjay and give him `1/7`th share, new profit sharing ratio of partners will be _________________.

Select the most appropriate answer from the alternative given below and rewrite the sentence.

Akash, Prakash and Deepak are partners who share profits as 3:2:1. They admit Suraj as a partner and decided to share future profits as 5:3:2:2. The sacrifice ratio will be __________

Select the most appropriate answer from the alternative given below and rewrite the sentence.

The _____________ ratio is useful for making adjustment for goodwill among the old partners.

Select the most appropriate answer from the alternative given below and rewrite the sentence.

Krishna and Balram, who are equal partners, admit Arjun into partnership for 1/4^th share, their new profit sharing ratio will be ________________.

If any asset is taken over by partner from the firm ______ account will be debited.

Select the most appropriate answer from the alternative given below and rewrite the sentence.

In case of admission of a partner, the profit or loss on revaluation of assets and liabilities is shared by _________________ partners.

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.

State 'True' or 'False'
When goodwill is paid privately, no entry in the books of account is required.

State 'True' or 'False'
The goodwill brought in by a new partner is shared by the old partners.

State 'True' or 'False'
The goodwill brought in by the new partner is shared by all partners.

State 'True' or 'False'
Profit on revaluation account is distributed between the old partners on admission of a partner.

State 'True' or 'False'
The new partner must pay his share of goodwill in cash only.

State 'True' or 'False'
A new partner is admitted in the firm for getting additional capital and skill.

State 'True' or 'False'.

The credit balance of revaluation account means loss on revaluation account.

State 'True' or 'False'
If the goodwill account raised up, goodwill account is debited.

State True or False with reason.

When goodwill is written off, goodwill amount is debited.

State 'True' or 'False'
On admission of a partner, the amount of goodwill brought in cash is credited to goodwill account.

The Balance Sheet of Rajkumar and Rajendra Kumar as on 31^st March 2012 is set out below, they share profits and losses in the ratio of 2:1.

Balance Sheet as on 31^st March, 2012

They agreed to admit Dhiraj Kumar on 1^st April, 2012 as a partner into the firm on the following terms on.

(1) Dhiraj Kumar to bring Rs 60,000 as capital and Rs 45,000 as a goodwill, which is to be retained in the business. He will be entitled to 1/4^th share of profit of the firm.

(2) 50% of General Reserve is to remain as Reserve for doubtful debts.

(3) Furniture is to be depreciated by 5%.

(4) Stock is to be revalued at Rs 65,000/-

(5) Creditors of Rs 5,000 are not likely to claim and hence should be written off.

(6) Rent of Rs 2,000 due but not received has not been recorded in the books.

Pass the necessary journal entries in the books of new firm and prepare Balance Sheet of the new firm.

Suresh and Ramesh are partners in a business sharing Balance sheet as on 31st March 2013 are as follows:

They admitted Kailash on 1^st April 2013 as a partner on the following terms:

1) Kailash will bring Rs 30,000 as his capital for 1/4^th share in future profit and Rs. 12,000 as goodwill which will be withdrawn by old partners.

2) Stock and Machinery to be depreciated by 10%.

3) R.D.D. is to be maintained at 5% on debtors.

4) Building to be appreciated by 20% and furniture is revalued at Rs 10,000.

Prepare Profit and Loss Adjustment Account, Partner’s Capital Accounts, and Balance Sheet of the New firm.

Snehal and Meenal are equal partners in a business. Their Balance sheet is as follows :

                 Balance Sheet as on 31^st March, 2012

They agreed to admit Kamal on 1^st April, 2012 on the following terms.

1) He should bring 50,000 towards his capital for 1/4^th share in future profit.

2) Goodwill A/c be raised in the books of the firm Rs 40,000/-

3) R.D.D to be maintained at 5% on debtors.

4) Premises to be valued at Rs 30,000 and Equipments to be written off fully.

5) Interest at the rate of 15% p.a. is due on bank loan.

6) Creditors allowed a discount of Rs 1100/- and they were paid off immediately.

Pass necessary journal entries to record the above scheme of admission.

Following is the balance sheet of Harish and Girish

               Balance Sheet as on 31^st March, 2010

They admitted Shirish on 1^st April 2010 on the following conditions:

1) For his 1/3^rd share in the future profits Shirish brings Rs 2,00,000 as his Capital.

2) It is decided to raise goodwill by Rs 90,000 and write it off fully after Shirish’s admission.

3) Equipments and plant to be depreciated by 20% and10% respectively and Building to be appreciated by 15%.

4) Bills Payable were retired for Rs 35,000

5) All debtors are considered good.

6) Furniture of the book value Rs 12,000 was taken over by Harish at 40% of the book value.

Prepare, revaluation A/c, Partner’s Capital Account and Balance Sheet of the new firm.

From the following Trial Balance of M/s Kale and Gore, you are required to prepare Trading and Profit and Loss Account for the year ended 31st March, 2013 and Balance Sheet on that date. They share profits and losses in their capital ratio.

                    Trial Balance as on 31^st March, 2013

Adjustments:

1. Closing stock was valued at cost Rs 76,000 while its market price was Rs 80,000.
2. Uninsured goods worth Rs 10,000 were stolen.
3. Goods worth Rs 10,000 were sold and delivered on 31st March 2013, but on entry is passed sales book.
4. Depreciate Plant and Machinery at 10% and Motor van at 15% p.a.
5. Bills Receivable includes a dishonoured bill of Rs 4,000.
6. Create a reserve for doubtful debts at 5% on Debtors.

Raj and Dev are partners sharing profits and losses 3:2 respectively. Their position on 31^st March, 2011

                  Balance Sheet as on 31^st March, 2011

On 1^st April, 2011 they admitted Manoj on following terms:

1) Manoj should bring in cash Rs 1,00,000 as a capital for 1/5^th share in future profit and Rs 25,000 as goodwill.

2) Building should be revalued for Rs 1,25,000.

3) Depreciate furniture at 12 ½ % p.a. and stock at 10% p.a.

4) R.D.D. should be maintained as it is.

5) The Capital accounts of partners should be adjusted in their new profit sharing ratio through bank account.

Prepare, Profit and Loss Adjustment Account, Capital Accounts, Balance Sheet of new firm and show how you have calculated new ratio and new capital.

Following is the Balance Sheet of Dhiraj and Niraj who shared profits and losses equally.

                  Balance Sheet as on 31^st March, 2013

On 1^st April, 2013 they agreed to admit Suraj on the following terms and conditions:

1) Suraj to bring for 1/3^rd share in future profit in cash Rs 90,000 towards his capital.

2) The firms goodwill should be raised to Rs 90,000 and it is to be written off after Suraj admission in new profit ratio.

3) Plant and Machinery was found undervalued by 10% and Land and Building was found overvalued by 20%.

4) Stock to be increased by Rs 2,200 and furniture to be reduced to Rs 10,000/-

5) Out of creditors Rs 1,200 is no more payable.

6) The Capital A/c to be adjusted in new profit sharing ratio by opening the current accounts.

Prepare Revaluation A/c, Capital A/c and New Balance Sheet.

Vaibhav and Vilas were partners sharing profit and losses in the ratio of 2: 3 respectively. Their Balance Sheet as on 31^st March 2012 was as follows.

               Balance Sheet as on 31^st March 2012

They agreed to admit Vivek as a partner on 1^st April 2012 on the following terms:

1) Vivek will have 1/4^th share in future profits for which he shall bring Rs 25,000 as his capital and Rs 20,000 as his share of goodwill.

2) Land & Building are valued at Rs 30,000 and while stock is valued at Rs 55,000.

3) Plant is taken over by Vilas 10% discount.

4) Depreciate furniture by 10%.

5) Provision for bad and doubtful debts is to be maintained at 5% on debtors.

6) The capital account of all the partners to be adjusted in their new profit sharing ratio and excess amount to be transferred to their loan account.

Prepare Profit and Loss Adjustment Account, Partner's Capital Accounts and Balance Sheet of New Firm.

Manoj and Rahul are equal partners in a business. Their Balance sheet as on 31^st March, 2013 stood as under:

                 Balance Sheet as on 31^st March, 2013

They decided to admit Amit on 1^st April, 2013 on the following terms:

1) The Machinery and Building be depreciated by 10%

2) Reserve for doubtful debts to be increased to Rs 5,000.

3) Bills receivable are taken over by Manoj at a discount of 5%.

4) The amount of creditors paid at a discount of 10%.

5) The Capital Accounts of all the partners be adjusted in current account of partners.

6) Amit should bring Rs 80,000 as capital for his 1/4^th in future profits and goodwill account be opened in the books of the firm at Rs 40,000.

Prepare Profit and Loss Adjustments A/c, Partner’s Capital A/c and Balance sheet of the firm at Rs 4,000/-

The Balance Sheet of Ramakant and Shyamkant who shared the profits in the ratio of 2:1 is as under

Balance Sheet as on 31^st March, 2012

On 1^st April, 2012 Umakant was admitted as 1/4^th partner on the following terms:

1) He brings equipments of Rs 80,000 as his capital.

2) Firm’s goodwill is valued at Rs 1,44,000 and Umakant agreed to bring his share in firm’s goodwill by cheque.

3) R.D.D. should be maintained at 7.5% on debtors.

4) Increase live stock by Rs 2,600 and write off loose tools by 20%.

5) Outstanding rent paid Rs 9,040 in full settlement.

Pass necessary journal entries to record the above scheme of admission.