Test Papers Designed By : Dr. Vinod Kumar (e-mail : authorcbse@gmail.

com)
Dr. Vinod Kumar is a great name in the field of Accountancy.
He is author of very popular book “Ultimate Book of Accountancy” class 12th and 11th.
Contact Detail : Vishvas Publications 09216629576 and 09256657505
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CBSE TEST PAPER-04

Class - XII Accountancy (Admission of a New Partner)
Topic : Adjustment of Capital

1. X and Y are partners sharing profits in the ratio of 2:1. Z is admitted into the firm for 1/4th [3]
share of profits. Z brings in Rs.40,000 in respect of his capital. The capitals of old partners
after all adjustments in respect of goodwill, revaluation of assets and liabilities, etc. have
been worked out at Rs.90,000 for X and Rs.30,000 for Y. It is agreed that partners capitals
will be according to the new profit sharing ratio.

Find out the capitals of X and Y.

2. Vinod, Mohan and Kumar are partners in a firm sharing profits in the ratio of 3:2:1. Sohan [3]
is admitted into the firm for 1/4th share in profits, which he gets as 1/8th from Vinod and
1/8th from Mohan. The total capital of the firm is agreed upon as Rs.60,000 and Sohan is to
bring in cash equivalent to 1/4th of this amount as his capital. The capitals of other partners
are also to be adjusted in the ratio of their respective shares in profits and losses. The
respective capitals of Vinod, Mohan and Kumar after all adjustments have been made,
works out at Rs.20,000, Rs.17,500 and Rs.15,000 respectively. Calculate the final capitals
of partners.

3. A and B are partners in a firm sharing profits in the ratio of 3 : 2. Their balance sheet as at [6]
31.12.2013 stood as under:
Liabilities Amount Assets Amount

General Reserve 10,000 Machinery 33,000

Sundry Creditors 36,000 Furniture 15,000
Bank Loan 9,000 Investments 20,000
Capitals : A 35,000 Stock 23,000
B 30,000 65,000 Debtors 19,000
Less : Provision 2,000 17,000
Cash 12,000
1,20,000 1,20,000
On that date they admitted C into partnership for 25% share in the profits on the following
terms:
(i) C brings capital proportionate to his share. He brings Rs.4,000 for goodwill in cash out of
his share of Rs.7,000.
(ii) Depreciate furniture by 10%.
(iii) Half of the investments were to be taken over A and B in their profit sharing ratio and
remaining to be valued at Rs.13,000.
(iv) Partners agreed to share future profits in the ratio of 3 : 3 : 2.

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 Prepare Revaluation A/c, Partners Capital A/cs and Balance Sheet of new firm.

4. Ram and Shyam were partners in a firm sharing profits in the ratio of 3 : 2. On 31. 3. [6]
2013. Their Balance Sheet was as follows:
Liabilities Amount Assets Amount
Sundry Creditors 10,000 Plant and Machinery 10,000
Workmen Compensation fund 5,000 Land and Building 8,000
General Reserve 15,000 Debtors 12,000
Capitals : Ram 10,000 Less: Provision 1,000 11,000
Shyam 10,000 20,000 Stock 12,000
Cash 9,000
50,000 50,000
On the above date Mohan was admitted as a new partner in the firm on the following
terms:
(i) Provision of doubtful debts would be increased by Rs.2,000.
(ii) The value of land and building would be increased to Rs.18,000.
(iii) The value of stock would be increased by Rs.4,000.
(iv) The liability against Workmen’s Compensation Fund is determined at Rs.2,000.
(v) Mohan brought in as his share of goodwill Rs.10,000 in cash.
(vi) Mohan would bring further cash as would make his capital equal to 20% of the
total capital of new firm after the above revaluation and adjustments are carried
out.
Prepare Revaluation A/c, Partners Capital A/cs and Balance Sheet of new firm.

5. (When Capitals are adjusted on the basis of New Partner’s Capital) A and B are [6]
partners in a firm sharing profits in the ratio of 3 : 2. Their balance sheet was as
follows on 31.3.2013:
Liabilities Amount Assets Amount
General Reserve 10,000 Goodwill 5,000
Sundry Creditors 50,000 Plant & Machinery 65,000
Capitals : A 60,000 Furniture 15,000
B 50,000 1,10,000 Investments 20,000
Stock 20,000
Debtors 30,000
Cash 15,000
1,70,000 1,70,000
On that date C is admitted as a partner on the following terms:
(a) C is to bring capital Rs.40,000 and Goodwill Rs.15,000.
(b) Partners agreed to share the future profits in the ratio of 5:3:2.
(c) Investments will be appreciated by 20% and furniture depreciated by 10%.
(d) One customer who owed the firm Rs.2,000 becomes insolved and nothing could be
realised from him.
(e) Creditors will be written back by Rs.2,000.
(f) Outstanding bills for repairs Rs.1,000 will be provided for.
(g) Interest accrued on investments Rs.2,000.
(h) Capital of the partners shall be proportion to their profit sharing ratio. For this

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 adjustments to be made through cash.

Prepare Revaluation A/c, Partners Capital A/cs and Balance Sheet of new firm.

6. A and B are partners in a firm sharing profits in the ratio of 3:1. Their Balance Sheet on [6]
31st March 2013 was as follows:
Liabilities Rs Assets Rs
Creditors 70,000 Land and Building 40,000
General reserve 10,000 Plant and Machinery 70,000
A’s capital 50,000 Investments 26,000
B’s capital 80,000 Stock 30,000
Debtors 35,000
Less : Provision 1,000 34,000
Cash 10,000
2,10,000 2,10,000
C is admitted into the partnership giving her 1/4th share in profits. C to bring Rs.60,000 as
her capital, subject to following terms:
(i) Goodwill of the firm to be valued at Rs.24,000
(ii) Land and Building were valued at Rs.65,000 and Plant and Machinery at Rs.60,000.
(iii) Provision for bad and doubtful debts was found in excess by Rs.400
(iv) A Liability of Rs.1,200 included in sundry creditors was not likely to arise.
(v) The Capitals of the partners be adjusted on the basis of C’s contribution of capital.
(vi) Excess of shortfall, if any to be transferred to Current Accounts.
Prepare Revaluation A/c, Partners’ Capital A/cs and the balance sheet of new firm.

7. (When new partner brings his share on the basis of Total Capital) The following is the [6]
Balance sheet as on 31st December 2002 of A and B, who share profits and losses in the
ratio of 3 : 2.
Liabilities Rs. Assets Rs.
Capitals : Plant and Machinery 10,000
A 10,000 Land and building 8,000
B 10,000 Debtors 12,000
General Reserve 15,000 Less : Provision 1,000 11,000
Workmen’s Compensation fund 5000 Stock 12,000
Creditors Cash 9,000
10,000
50,000 50,000

On 1st January 2003, they agreed to admit C into partnership on the following terms :
i) Provision of doubtful debts would be increased by Rs.2,000.
ii) The value of Land and Building would be increased to Rs.18,000.
iii) The value of stock would be increased by Rs.4,000.
iv) The liability against Workmen’s Compensation Fund is determined at Rs.2,000.
v) C brought in as his share of Goodwill Rs.10,000 in cash.
vi) Capital accounts of A and B will be adjusted by opening cash account
vii) C would bring further cash as would make his capital equal to 20% of the total
capital of the new firm after the above revaluation and adjustments are carried

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 out.
Prepare Revaluation Account, Partners Capital accounts and balance sheet of the firm after
C’s admission.
8. (When new partner brings his share on the basis of combined capital) A and B are [6]
partners sharing profits in the ratio of 3:2. Their Balance sheet on 31st March 2003 stood as
under:
Liabilities Rs. Assets Rs.
Capitals: Machinery 66,000
A 70,000 Furniture 30,000
B 60,000 Investments 40,000
General Reserve 20,000 Stock 46,000
Bank Loan 18,000 Debtors 38,000
Creditors 72,000 Less: Provison 4,000 34,000
Cash 24,000

2,40,000 2,40,000
On this date they admitted C for 25% share in profits on following terms:
a) C brings capital proportionate to his share after all adjustments and Rs.8000 for
goodwill out of his share of Rs.14,000.
b) Depreciate furniture by 10%.
c) Half of investments were to be taken over by A and B in their profit sharing ratio
and remaining valued at Rs.26,000.
d) New ratio will be 3:3:2
e) C brings 25% of the combined capital of A and B as Capital.
Prepare Revaluation account, Partners capital account and Balance Sheet.

9. (When Total Capital of firm is given in adjustment) A and B are partners in a firm (6)
sharing profits in the ratio of 3 : 2. Their Balance Sheet as on 31st December, 2004 stood as
under :
Liabilities Rs. Assets Rs.
Capitals : Machinery 33,000
A 35,000 Furniture 15,000
B 30,000 Investments 20,000
General Reserve 10,000 Stock 23,000
Bank Loan 9,000 Debtors 19,000
Creditors 36,000 Less provision 2,000 17,000
Cash 12,000
1,20,000 1,20,000
th
On that date they admitted C into partnership for 1/4 share in the profit on the following
terms :
i) C brings capital proportionate to his share. He brings Rs.7,000 in cash as his share
of goodwill.
ii) Debtors are all good.

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 iii) Depreciate stock by 5% and Furniture by 10%.
iv) An outstanding Bill for repairs Rs.1,000 will be brought in books.
v) Half of the investments were to be taken over A and B in their profit sharing ratio
at book value.
vi) Bank loan is paid off.
vii) Partners agreed to share future profits in ratio 3 : 3 : 2.
viii) Capital of the firm is fixed at 1,60,000. Excess or shortfall, if any, to be
transferred to current accounts.
Prepare Revaluation account, Partners capital account and Balance Sheet.

10. A and B are partners in a firm sharing profits in the ratio of 3:1. Their Balance Sheet on (6)
31st March 2013 was as follows:
Liabilities Rs Assets Rs
Sundry creditors 41,500 Cash at bank 22,500
A’s capital 30,000 Bills Receivables 3,000
B’s capital 16,000 Debtors 16,000
Stock 20,000
Furniture 1,000
Land and Building 25,000

87,500 87,500
th
C is admitted into the partnership giving her 1/5 share in profits subject to the following
terms:
(i) C will bring in Rs.10,000 as his capital and Rs.5,000 as his share of goodwill for
1/5th share in profits. Half of the amount of goodwill is withdrawn by A and B.
(ii) Stock and Furniture are to be reduced by 10% each and 5% Reserve for doubtful debts
is to be created on the Sundry Debtors and Bills Receivables.
(iii) Land and Building is to be appreciated by 20%.
(iv) A Liability of Rs.1,000 is to be created for a claim for damages against the firm.
(v) An item of Rs.650 included in the Sundry Creditors is not likely to be claimed and
therefore be written off.
Prepare Revaluation A/c, Partners’ Capital A/cs and Balance Sheet.

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 Accountancy Challenge
Challenge : 1
Vinod and Kumar are in partnership sharing profits and losses in proportion of two-thirds and one-
third respectively. Their Balance Sheet on 31st December 2013 was as follows:
Cash Rs.5,000; Sundry debtors Rs.75,000; Stock Rs.1,10,000; Plant and Machinery Rs.20,000; Sundry
Creditors Rs.10,000; Bank Overdraft Rs.75,000; Vinod’s Capital Rs.75,000; Kumar’s Capital
Rs.50,000.
On 1st January, 2014, they admited Mohan into partnership on the following terms:
(i) Mohan to purchase one- quarter of the Goodwill for Rs.15,000 and provide Rs.50,000 as
capital. Mohan brings necessary cash for goodwill and capital.
(ii) Profits and losses are to be shared in proportion of one- half to Vinod, One-quarter to Kumar
and one-quarter to Mohan.
(iii) Plant and Machinery is to be reduced by 10% and Rs.2,500 is to be provided for estimated bad
debts. Stock is to be taken at a valuation of Rs.1,24,700.
(v) By bringing in or withdrawing cash the capital of Vinod and Kumar are to be made
proportionate to that of Mohan on their profit sharing ratio.
Prepare necessary ledger accounts in the books of the firm relating to the above arrangement and
submit the opening Balance Sheet of the new firm.

Challenge : 2
Vinod and Kumar were partners in a firm with capitals of Rs.6,00,000 and Rs.8,00,000 respectively.
On 1 April 2014, they admitted Mohan as a partner for one-fourth share in profits on his payment of
Rs.10,00,000 as his capital and Rs.4,50,000 for his one-fourth share of goodwill.
On that date, the creditors of Vinod and Kumar were Rs.3,00,000 and Bank overdraft was Rs.75,000.
Their assets apart from cash included stock Rs.50,000; Debtors Rs.2,00,000; Plant and Machinery
Rs.4,00,000; Land and Building Rs.10,00,000. It was agreed that stock should be depreciated by
Rs.10,000. Plant and Machinery by 20%, Rs.25,000 should be written off as bad debts and land
building should be appreciated by 25%.
Prepare Revaluation Account, Capital Accounts of Vinod, Kumar and Mohan and the Balance Sheet of
new firm.

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