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(f) A, B and C will share profits in the ratio of 3 : 2 : 1 were to share

future profits in ratio 3 : 2.
Prepare Revaluation A/c, Partner's Capital A/c and Balance Sheet of

new firm.
Multiple Choice Questions
1. When a new partner brings his share of goodwill in cash, the amount is
debited to–
(a) Goodwill A/c
(b) Capital A/cs of new partner
(c) Capital A/cs of old partners
(d) Cash A/c
2. When a new partner doesn't bring his share of goodwill in cash, the
amount is debited to–
(a) Cash A/c (b) Current A/c of new partner
(c) Capital A/cs of old partners
(d) Premium for Goodwill A/c
3. It, at the time of admission, some profit and loss account balance
appears in the books, it will be transferred to–
(a) Profit and loss adjustment A/c
(b) Revaluation A/c
(c) Old partner's capital account
(d) All partner's capital accounts
4. If, at the time of admission, there is some unrecorded liability, it will be–
(a) Credited to revaluation account
(b) Debited to revaluation account
(c) Debited to partner's capital account
(d) Credited to partner's capital account
5. If at the time of admission, the revaluation A/c shows a loss, it should
be–
(a) Credited to old partners capital A/c in old ratio.
(b) Credited to old partners capital A/c in sacrificing ratio.
(c) Debited to old partners capital A/c in old ratio.
(d) Debited to old partners capital A/c in sacrificing ratio.
6. Revaluation A/c is a–
(a) Real account (b) Asset account
(c) Personal account (d) Nominal account

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7. When the balance sheet is prepared after the new partnership

agreement, the assets and liabilities are recorded at–
(a) Current figures (b) Revalued figures
(c) Historical cost (d) Realisable value
8. L and M are partners sharing profits in ratio of 3 : 2 respectively.
N was admitted for 1/5th share of profit. Machinery would be appreciated
by 10% (Book value ` 80,000) and Building would be depreciated by
20% (` 2,00,000). Unrecorded debtors of ` 1250 would be brought into
books new and a creditor amounting to ` 2750 died and need not pay
anything on this account. What will be profit/loss on revaluation?
(a) Loss ` 28,000 (b) Profit ` 28,000
(c) Loss ` 40,000 (d) Profit ` 40,000
9. A and B are partners sharing profits in the ratio of 5 : 4. They admitted
C for 1/5th profit, for which he paid ` 90,000 against capital and ` 45,000
against goodwill. Find the capital balance for each partner taking C's
capital as base capital.
(a) ` 2,00,000; ` 90,000; ` 90,000
(b) ` 3,00,000; ` 2,40,000; ` 1,35,000
(c) ` 2,00,000; ` 1,60,000; ` 90,000
(d) ` 3,00,000; ` 1,35,000; ` 1,35,000
10. X and Y are partners sharing profits and losses in the ratio of 5 : 3. On
admission, C brings ` 70,000 as cash and ` 40,000 against Goodwill.
New profit ratio between X,Y and Z is 7 : 5 : 4. The Sacrificing ratio of
X and Y is–
(a) 3 : 1 (b) 1 : 3
(c) 4 : 5 (d) 5 : 9
11. A and B are partners in a firm with capital of ` 1,80,000 and ` 2,00,000.
C was admitted for 1/3rd share in profit and brings ` 3,40,000 as capital,
calculate the amount of goodwill–
(a) ` 2,40,000 (b) ` 1,00,000
(c) ` 1,50,000 (d) ` 3,00,000
12. A, B, C and D are partners. A and B share 2/3rd of profits equally and C
and D share remaining profits in the ratio of 3 : 2. Find the profit sharing
ratio of A, B, C and D.
(a) 5 : 5 : 3 : 2 (b) 7 : 7 : 6 : 4
(c) 2.5 : 2.5 : 8 : 6 (d) 3 : 9 : 8 : 3
13. Sacrificing ratio is used to distribute ............. in case of admission of a
partner.

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(a) Reserves (b) Goodwill

(c) Revaluation profit (d) Balance in profit and loss account
14. X, Y and Z are partners sharing profit in the ratio of 3 : 2 : 1. They agree
to admit M into the firm. X, Y and Z agreed to give 1/3rd, 1/6th, 1/9th share
of their profit. The share of profit of M will be–
(a) 11/54 (b) 12/54
(c) 13/54 (d) 14/54
15. A and B are partners sharing profits in the ratio of 2 : 3. Their balance
sheet shows machinery at ` 4,00,000; stock at ` 1,60,000 and Debtors
at ` 3,20,000. C is admitted and new profit sharing ratio is agreed at
6 : 9 : 5. Machinery is revalued at ` 3,40,000 and a provision is made
for doubtful debts @ 2.5%. A's share in loss on revaluation amount to
` 20,000. Revalued value of stock will be–
(a) ` 98,000 (b) ` 1,00,000
(c) ` 60,000 (d) ` 62,000
Answers
1. (d) 2. (b) 3. (c) 4. (b)
5. (c) 6. (d) 7. (b) 8. (a)
9. (c) 10. (a) 11. (d) 12. (a)
13. (b) 14. (c) 15. (a)
True or False
1. Contigent liability becoming a certain liability is debited to Revaluation
Account at the time of admission of a partner.
2. On revaluation of assets and liabilities, capital accounts of old partners
donot change.
3. Unless agreed otherwise, the new profit sharing ratio of old partners
will be the same as their old profit sharing ratio.
4. It is necessary that partners should have capitals in their profit sharing
ratios.
5. In the absence of any information, any surplus or deficiency in capital
should be adjusted through current account.
6. Revaluation account is credited for bills accepted issued by creditors,
not recorded in books earlier.
7. An old customer, whose account was written off as bad debts, has
promised to pay but it will not be shown in revaluation account.
8. Employee's provident fund will be distributed among old partners in old
ratio, at the time of admission of a partner.

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9. General reserve, in balance sheet at the time of admission of partner be

distributed among partners in their sacrificing ratio.
10. Existing Goodwill A/c in balance sheet is to be written off in old partners
in odd ratio at the time of admission of partner.
Answers
1. True 2. False 3. True 4. False
5. False 6. False 7. True 8. False
9. False 10. True
Fill in the Blanks with Appropriate Words–
1. Partner's current A/c balances in the balance sheet means that the
capital A/cs are ............
2. For any decrease in the value of Asset, the Revaluation Account is
............
3. Investment fluctuation reserve is a reserve set aside out of profit to
adjust the difference between ............ and ............ of investments.
4. C, the incoming partner, is to bring ` 6000 as goodwill for 1/5th share in
the firms profits. Total goodwill of the firm will be ............
5. Revaluation A/c is prepared to record the assets and liabilities at their
............ values.
Answers
1. Fixed 2. Debited 3. Book value, Market value
4. ` 30,000 5. Revised

EXERCISE
1. (a) 33 : 23 : 14
(b) 13 : 10 : 7 : 5
2. (a) NPSR 64 : 40 : 25; SR 8 : 5
(b) NPSR 8 : 3 : 3 : 10
3. (a) Cr. A's Capital A/c by ` 33750 and B's Capital A/c by ` 20250;
NPSR = 5 : 3 : 2
(b) Cr. A's Capital A/c by ` 27000 and B's Capital A/c by ` 27000;
NPSR = 21 : 11 : 8
(c) Cr. A's Capital A/c by ` 40500 and B's Capital A/c by ` 13500;
NPSR = 19 : 13 : 8
(d) Cr. A's Capital A/c by ` 45000 and B's Capital A/c by ` 9000;
NPSR = 55 : 41 : 24

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4. (a) Bajaj (Dr.) ` 20,000; Rahul (Cr.) ` 16,000; Anurag (Cr.) ` 4000
(b) (i) Bajaj (Dr.) ` 20,000; Rahul (Cr.) ` 16,000; Anurag (Cr.) ` 4000
(ii) Rahul (Dr.) ` 30,000; Anurag (Dr.) ` 20,000; Goodwill (Cr.)  
   ` 50,000
(c) (i) Rahul (Dr.) ` 60,000; Anurag (Dr.) ` 40,000; Goodwill (Cr.)  
   ` 1,00,000
(ii) Goodwill (Dr.) ` 60,000; Rahul (Dr.) ` 36,000; Anurag (Cr.)  
   ` 24,000
(iii) Rahul (Dr.) ` 20,000; Anurag (Dr.) ` 20,000; Bajaj (Dr.) ` 20,000;
Goodwill (Cr.) ` 60,000
5. (a) Rs current A/c Dr. by ` 80,000; P(Cr.) ` 56,000 and Q(Cr.) ` 24000
(b) (i) Bank A/c Dr. ` 40,000; Premium for Goodwill A/c (Cr.) ` 40,000
(ii) Premium for Goodwill Dr. ` 40,000; R's current A/c Dr. ` 40,000;
P(Cr.) ` 56,000 and Q (Cr.) ` 24,000.
6. Premium for Goodwill Dr. 45000; Shri Dr. 37500; Hari Cr. 67500 and
Ravi Cr. 15,000.
7. Hidden Goodwill = 2,40,000; Z's share of Goodwill = 80,000
(a) Z's current Dr. 80,000; X Cr. 60,000 and Y Cr. 20,000
(b) P and L Dr. 1,30,000; WCR Dr. 60,000; X Cr. 118750 and
Y Cr. 71250
8. A,B and D will bring 10,000; 35,000; 60,000 respectively while C will
withdraw 3000.
A's capital = ` 9000; B's capital = ` 65,000; C's capital = ` 25,000;
D's capital = ` 60,000.
9. Profit on Revaluation = ` 3000
Krishna's Capital A/c = ` 37200
Suresh's Capital A/c = ` 24800
Mohan's Capital A/c = ` 10000
Balance Sheet Total = ` 87000
10. Loss on Revaluation = ` 4200
A's Capital A/c = ` 47200
B's Capital A/c = ` 60200
C's Capital A/c = ` 40000
Balance Sheet Total = ` 185600
11. Profit on Revaluation = ` 9520
A's Capital A/c = ` 44100
B's Capital A/c = ` 36750

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C's Capital A/c = ` 22050

D's Capital A/c = ` 14700
Balance Sheet Total = ` 144120
13. (a) 130000 (b) 140000
(c) 27000 (d) 600
(e) 300 (f) 20000
(g) 10000 (h) Revaluation A/c
(i) 600 (j) 300
(k) 72975 (l) 144600
(m) 147300 (n) 72975
(o) 170600 (p) 16300
(q) 72975
Balance Sheet Total = ` 395475
14. Loss on Revaluation = ` 20000
A's Capital A/c = ` 780000
C's Capital A/c = ` 337000
Balance Sheet Total = ` 1740000

rrr

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Source: EDUDEL