T.S. Grewal’s Double Entry Book Keeping—Accounting for Not-for-Profit Organisations and Partnership Firms
1. R and S are partners sharing profits in the ratio of 5 : 3. T joins the firm as a new partner.
R gives 1/4th of his share and S gives 1/5th of his share to the new partner.
Find out new profit-sharing ratio. (Delhi 2007 C)
[Ans.: New Profit-sharing Ratio—75 : 48 : 37.]
2. X and Y were partners sharing profits in the ratio of 3 : 2. They admitted P and Q as new partners.
X surrendered 1/3rd of his share in favour of P and Y surrendered 1/4th of his share in favour of Q.
Calculate new profit-sharing ratio of X, Y, P and Q. (Delhi 2000, 2002 C)
[Ans.: New Profit-sharing Ratio of X, Y, P and Q—4 : 3 : 2 : 1.]
3. A and B are in partnership sharing profits and losses as 3 : 2. C is admitted for 1/4th share. Afterwards
D enters for 20 paise in the rupee. Compute profit-sharing ratio of A, B, C and D after D’s admission.
[Ans.: New Profit-sharing Ratio of A, B, C and D—9 : 6 : 5 : 5.]
4. A and B are partners sharing profits in the ratio of 3 : 2. Their books show goodwill at ` 2,000. C is
admitted as parter for 1/4th share of profits and brings in ` 10,000 as his capital but is not able to bring
in cash for his share of goodwill ` 3,000. Draft Journal entries.
5. A and B are partners in a firm sharing profits and losses in the ratio of 3 : 2. Following is their Balance
Sheet as at 31st March, 2020:
Liabilities
` Assets `
Capital A/cs: Building 35,000
A 50,000 Machinery 25,000
B 30,000 80,000 Stock 15,000
Creditors 20,000 Debtors 15,000
Investments 5,000
Bank 5,000
1,00,000 1,00,000
C is admitted as a partner on 1st April, 2020 on the following terms:
(a) C is to pay ` 20,000 as capital for 1/4th share. He also pays ` 5,000 as premium for goodwill.
(b) Debtors amounted to ` 3,000 is to be written off as bad and a Provision of 10% is created against
Doubtful Debts on the remaining amount.
(c) No entry has been passed in respect of a debt of ` 300 recovered by A from a customer, which was
previously written off as bad in previous year. The amount is to be paid by A.
(d) Investments are taken over by B at their market value of ` 4,900 against cash payment.
You are required to prepare Revaluation Account, Partners’ Capital Accounts and new Balance Sheet.
[Ans.: Loss on Revaluation—` 4,000; Partners’ Capital A/cs: A—` 50,300;
B—` 30,400; C—` 20,000; Balance Sheet Total—` 1,20,700.]
[Hint: Provision for Doubtful Debts = 10/100 (` 15,000 – ` 3,000 (Bad Debts)).]
6. X and Y are partners sharing profits and losses in the ratio of 3/4 and 1/4. Their Balance Sheet as at
31st March, 2019 is:
Liabilities
` Assets `
Capital A/cs: Land and Building 1,25,000
X 1,50,000 Furniture 5,000
Y 80,000 2,30,000 Stock 1,00,000
Workmen Compensation Reserve 20,000 Sundry Debtors 80,000
Sundry Creditors 1,50,000 Bills Receivable 15,000
Bills Payable 37,500 Cash at Bank 1,00,000
Cash in Hand 12,500
4,37,500 4,37,500
1
, T.S. Grewal’s Double Entry Book Keeping—Accounting for Not-for-Profit Organisations and Partnership Firms
They admit Z into partnership on 1st April, 2019 on the following terms:
(a) Goodwill is to be valued at ` 1,00,000.
(b) Stock and Furniture to be reduced by 10%.
(c) A Provision for Doubtful Debts is to be created @ 5% on Sundry Debtors.
(d) The value of Land and Building is to be appreciated by 20%.
(e) Z pays ` 50,000 as his capital for 1/5th share in the future profits.
You are required to show Revaluation Account, Partners’ Capital Accounts and Balance Sheet of the new firm.
[Ans.: Gain (Profit) on Revaluation—` 10,500; Partners’ Capital A/cs: X—` 1,87,875;
Y—` 92,625; Z—` 30,000; Balance Sheet Total—` 4,98,000.]
Note: Z’s Share of Goodwill ` 20,000 (i.e., ` 1,00,000 × 1/5) can be adjusted through Z’s Current A/c.
In that situation, Partners’ Capital A/cs: X—` 1,87,875; Y—` 92,625; Z—` 50,000; Z’s Current A/c
(Dr.) —` 20,000; Balance Sheet Total—` 5,18,000.
7. Balance Sheet of Ram and Shyam who share profits in the ratio of their capitals as at 31st March, 2019 is:
Liabilities
` Assets `
Capital A/cs: Freehold Premises 20,000
Ram 30,000 Plant and Machinery 13,500
Shyam 25,000 55,000 Fixture and Fittings 1,750
Current A/cs: Vehicles 1,350
Ram 2,000 Stock 14,100
Shyam 1,800 3,800 Bills Receivable 13,060
Creditors 19,000 Debtors 27,500
Bills Payable 16,000 Bank 1,590
Cash 950
93,800 93,800
On 1st April, 2019, they admitted Arjun into partnership on the following terms:
(a) Arjun to bring ` 20,000 as capital and ` 6,600 for goodwill, which is to be left in the business and
he is to receive 1/4th share of the profits.
(b) Provision for Doubtful Debts is to be 2% on Debtors.
(c) Value of Stock to be written down by 5%.
(d) Freehold Premises are to be taken at a value of ` 22,400; Plant and Machinery ` 11,800; Fixtures and
Fittings ` 1,540 and Vehicles ` 800.
You are required to make necessary adjustment entries in the firm, give Balance Sheet of the new firm
as at 1st April, 2019 and also determine the ratio in which the partners will share profits, there being no
change in the ratio of Ram and Shyam.
[Ans.: Loss on Revaluation—` 1,315; Partners’ Capital A/cs: Ram—` 30,000; Shyam—` 25,000;
Arjun—` 20,000; Partners’ Current A/cs: Ram—` 4,883; Shyam—` 4,202;
Balance Sheet Total—` 1,19,085; New Ratio—18 : 15 : 11.]
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1. R and S are partners sharing profits in the ratio of 5 : 3. T joins the firm as a new partner.
R gives 1/4th of his share and S gives 1/5th of his share to the new partner.
Find out new profit-sharing ratio. (Delhi 2007 C)
[Ans.: New Profit-sharing Ratio—75 : 48 : 37.]
2. X and Y were partners sharing profits in the ratio of 3 : 2. They admitted P and Q as new partners.
X surrendered 1/3rd of his share in favour of P and Y surrendered 1/4th of his share in favour of Q.
Calculate new profit-sharing ratio of X, Y, P and Q. (Delhi 2000, 2002 C)
[Ans.: New Profit-sharing Ratio of X, Y, P and Q—4 : 3 : 2 : 1.]
3. A and B are in partnership sharing profits and losses as 3 : 2. C is admitted for 1/4th share. Afterwards
D enters for 20 paise in the rupee. Compute profit-sharing ratio of A, B, C and D after D’s admission.
[Ans.: New Profit-sharing Ratio of A, B, C and D—9 : 6 : 5 : 5.]
4. A and B are partners sharing profits in the ratio of 3 : 2. Their books show goodwill at ` 2,000. C is
admitted as parter for 1/4th share of profits and brings in ` 10,000 as his capital but is not able to bring
in cash for his share of goodwill ` 3,000. Draft Journal entries.
5. A and B are partners in a firm sharing profits and losses in the ratio of 3 : 2. Following is their Balance
Sheet as at 31st March, 2020:
Liabilities
` Assets `
Capital A/cs: Building 35,000
A 50,000 Machinery 25,000
B 30,000 80,000 Stock 15,000
Creditors 20,000 Debtors 15,000
Investments 5,000
Bank 5,000
1,00,000 1,00,000
C is admitted as a partner on 1st April, 2020 on the following terms:
(a) C is to pay ` 20,000 as capital for 1/4th share. He also pays ` 5,000 as premium for goodwill.
(b) Debtors amounted to ` 3,000 is to be written off as bad and a Provision of 10% is created against
Doubtful Debts on the remaining amount.
(c) No entry has been passed in respect of a debt of ` 300 recovered by A from a customer, which was
previously written off as bad in previous year. The amount is to be paid by A.
(d) Investments are taken over by B at their market value of ` 4,900 against cash payment.
You are required to prepare Revaluation Account, Partners’ Capital Accounts and new Balance Sheet.
[Ans.: Loss on Revaluation—` 4,000; Partners’ Capital A/cs: A—` 50,300;
B—` 30,400; C—` 20,000; Balance Sheet Total—` 1,20,700.]
[Hint: Provision for Doubtful Debts = 10/100 (` 15,000 – ` 3,000 (Bad Debts)).]
6. X and Y are partners sharing profits and losses in the ratio of 3/4 and 1/4. Their Balance Sheet as at
31st March, 2019 is:
Liabilities
` Assets `
Capital A/cs: Land and Building 1,25,000
X 1,50,000 Furniture 5,000
Y 80,000 2,30,000 Stock 1,00,000
Workmen Compensation Reserve 20,000 Sundry Debtors 80,000
Sundry Creditors 1,50,000 Bills Receivable 15,000
Bills Payable 37,500 Cash at Bank 1,00,000
Cash in Hand 12,500
4,37,500 4,37,500
1
, T.S. Grewal’s Double Entry Book Keeping—Accounting for Not-for-Profit Organisations and Partnership Firms
They admit Z into partnership on 1st April, 2019 on the following terms:
(a) Goodwill is to be valued at ` 1,00,000.
(b) Stock and Furniture to be reduced by 10%.
(c) A Provision for Doubtful Debts is to be created @ 5% on Sundry Debtors.
(d) The value of Land and Building is to be appreciated by 20%.
(e) Z pays ` 50,000 as his capital for 1/5th share in the future profits.
You are required to show Revaluation Account, Partners’ Capital Accounts and Balance Sheet of the new firm.
[Ans.: Gain (Profit) on Revaluation—` 10,500; Partners’ Capital A/cs: X—` 1,87,875;
Y—` 92,625; Z—` 30,000; Balance Sheet Total—` 4,98,000.]
Note: Z’s Share of Goodwill ` 20,000 (i.e., ` 1,00,000 × 1/5) can be adjusted through Z’s Current A/c.
In that situation, Partners’ Capital A/cs: X—` 1,87,875; Y—` 92,625; Z—` 50,000; Z’s Current A/c
(Dr.) —` 20,000; Balance Sheet Total—` 5,18,000.
7. Balance Sheet of Ram and Shyam who share profits in the ratio of their capitals as at 31st March, 2019 is:
Liabilities
` Assets `
Capital A/cs: Freehold Premises 20,000
Ram 30,000 Plant and Machinery 13,500
Shyam 25,000 55,000 Fixture and Fittings 1,750
Current A/cs: Vehicles 1,350
Ram 2,000 Stock 14,100
Shyam 1,800 3,800 Bills Receivable 13,060
Creditors 19,000 Debtors 27,500
Bills Payable 16,000 Bank 1,590
Cash 950
93,800 93,800
On 1st April, 2019, they admitted Arjun into partnership on the following terms:
(a) Arjun to bring ` 20,000 as capital and ` 6,600 for goodwill, which is to be left in the business and
he is to receive 1/4th share of the profits.
(b) Provision for Doubtful Debts is to be 2% on Debtors.
(c) Value of Stock to be written down by 5%.
(d) Freehold Premises are to be taken at a value of ` 22,400; Plant and Machinery ` 11,800; Fixtures and
Fittings ` 1,540 and Vehicles ` 800.
You are required to make necessary adjustment entries in the firm, give Balance Sheet of the new firm
as at 1st April, 2019 and also determine the ratio in which the partners will share profits, there being no
change in the ratio of Ram and Shyam.
[Ans.: Loss on Revaluation—` 1,315; Partners’ Capital A/cs: Ram—` 30,000; Shyam—` 25,000;
Arjun—` 20,000; Partners’ Current A/cs: Ram—` 4,883; Shyam—` 4,202;
Balance Sheet Total—` 1,19,085; New Ratio—18 : 15 : 11.]
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