Admission of a Partner

Learning objectives:-

After studying this lesson, the students will be able to:

i. Identify and deal effectively with the situation of reconstitution of partnership.

ii. Identify the problem arising due to admission of a partner in the firm.

iii. Calculate new and sacrifice ratio in different cases.

iv. Understand, calculate and make treatment of goodwill in different cases.

v. Make accounting treatment of the revaluation of assets and liabilities and distribute the profit and loss on revaluation among the old partners.

vi. Make accounting treatment of unrecorded assets and liabilities

vii. Prepare capital Accounts, Cash A/c and Balance Sheet of the New firm

viii. Adjust the Partners’ Capital Accounts

Salient Points:-

1.     Goodwill is the monetary value of business reputation. It is an intangible asset.

2.     Goodwill may be of two types:

a.      Purchased goodwill

b.     Non-purchased goodwill

3.     When existing firm faces problem of limited financial resources and man power then one new additional partner enters into firm.

4.     There are three methods of valuation of goodwill:

a.      Average Profit Method

b.     Super Profit method

c.      Capitalisation Method

5.     When new partner is admitted into existing partnership then existing partners have to sacrifice in favour of new partner, it is called sacrificing ratio.

6.     Share of goodwill of new partner will be credited to sacrificing partners into their sacrificing ratio.

7.     At the admission of new partner Profit & Loss on revaluation of assets and liabilities and balances of accumulated profits & losses will be distributed among old partners (only) in old ratio.

Ganga, Yamuna are partners sharing profits and losses in 3:2 respectively. Their position on 31. 3. 2013 [July 2017 Board Problem Solution.].

Ram and Madan were Partners sharing profits and Losses equally. [March 2017 Board Problem Solution]

Following is the balance sheet of Harish and Girish: [July 2016 Board Problem Solution]

Rani and Geeta are partners sharing profits and losses 3:2 respectively. Their position on 31st March, 2013 was as follows. [March 2016 Board Problem Solution]

Akash and Suraj are partners in a firm sharing profits and losses in the ratio 3:2. Their balance sheet as on 31st March, 2013 was as follows. [March 2015 Board Problem Solution]

Anil and Sunil were partners sharing profits and losses in the ratio of 2:1 respectively. [October 2014 Board Problem Solution]

Mrs. Shehal and Mrs. Meenal are equal partners in a business. Their balance sheet is as follows. [March 2014 Board Problem Solution]

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

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

3.   Mrs. Shehal and Mrs. Meenal are equal partners in a business. Their balance sheet is as follows.

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

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

6.  Suresh and Ramesh are partners in a business sharing profits and Losses in the ratio of 2:1 respectively. Their Balance Sheet as on 31st March, 2013 is as follows:

7.  Following is the balance sheet of Harish and Girish:

8.  Keshav and Madhav were partners sharing profits and losses in the ratio of 2:3.

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

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

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

12. The following is the Balance Sheet of the firm Sangam Traders as on 31st March, 2012. Ganga and Yamuna are the partners of the firm who share profits and losses in the ratio of 3 : 2 respectively.

13. Veena and Leela of Udgir are equal partners in a business. Their Balance Sheet as on 31st March, 2012 stood as under.

14. Raja and Rani were partners sharing profits and losses in proportion of their capitals. Their Balance Sheet on 31st March, 2012 was as under: Balance Sheet as on 31st March, 2012.

15. The following is the Balance Sheet of Shubha and Leena of Aurangabad who share profits in the ration 3:2 respectively as on 31.03.2012. [Ans.]

16. Madhu and Amar are partners in a firm sharing profits and losses in the proportion of 3/5 and 2/5 respectively. Their Balance Sheet as on 31st March, 2012 was as follows: [Ans. ]

17. Manish and Nitin are partners in a firm sharing Profits and Losses in the ratio of 3:1. Their Balance Sheet as on 31st March, 2012 was as follows:   [Ans]

18.  the balance sheet of Shrihas and Madan as on 31st March, 2012 is set out below, they share profits and losses in the ratio of 2:1.

19. Nandkishor and Nandlal are in partnership sharing profits and losses in the proportion of ¾ and ¼ respectively. Their Balance Sheet as on 31st March, 2014 was as under.

20. Ranade and Kanade were partners and shared the profits in the ratio of 3/5 th and 2/5th. On 31st March, 2014 their Balance Sheet was as follows.

21. Amar and Akbar are the partners in a business sharing profits and losses in the ratio 3:2 respectively. Their Balance Sheet as on 31st March, 2012 stood as under.

22.  The following is the Balance Sheet of M/s Sukhadeo and Hanumant on 31st March, 2012. They share profits and losses in the proportion of 3/5 and 2/5 respectively.

23. Sharad and Pankaj sharing profits in proportion of 3/5 and 2/5 respectively admit Nilesh into partnership on 1st April 2012 giving him ¼ share in profits on his agreeing to bring Rs. 10000 as capital. The old Partners guarantee the assets and liabilities as per the Balance Sheet given below.

24.  The following is the Balance Sheet of Ram and Laxman who share profits in the ratio 3:2 respectively as on 31st March, 2012.

25. Mr. Baba and Mr. Kaka were in partnership sharing profits and losses in the proportion of 3:2 respectively. Their Balance Sheet as on 31st March, 2012 stood as follows:

26. Amol and Abhijeet share Profits and Losses in the ratio of 3:2 in partnership firm. Their Balance Sheet as on 31st March, 2012 was as under.

27. Rajan & Padam are equal partners in a business. Their Balance Sheet as on 31st March, 2012 stood as under.

28. Ram, Shyam and Bharat were partners sharing profits and losses in the ration of 2:3:3 respectively. Their Balance Sheet on 31st March, 2012 was as follows.

29.  Admission of Partner Sum No. 7 Amar Akbar and Anthony