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Test: Admission Of New Partner - 3 - Commerce MCQ


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23 Questions MCQ Test Accountancy Class 12 - Test: Admission Of New Partner - 3

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Test: Admission Of New Partner - 3 - Question 1

A and B are partners sharing profits and losses in the ratio 5:3. They admitted C and agreed to give him 3/10th of the profit. What is the new ratio after C’s admission?

Detailed Solution for Test: Admission Of New Partner - 3 - Question 1

Given:
- A and B are partners sharing profits and losses in the ratio 5:3.
- C is admitted and agreed to give him 3/10th of the profit.
To find:
- The new ratio after C's admission.
Let's calculate the profit distribution among the partners:
- The total ratio of A and B is 5:3, which can be written as 5x and 3x respectively, where x is the common factor.
- The total ratio of A, B, and C after C's admission would be (5x + 3x + 3/10) : (3x) : (3/10), as C is entitled to 3/10th of the profit.
Simplifying the ratio:
- The total ratio becomes (8x + 3/10) : (3x) : (3/10).
To find the value of x:
- The total ratio is equal to 1, so we have the equation:
(8x + 3/10) + (3x) + (3/10) = 1.
Simplifying further, we get:
11x + 6/10 = 1.
11x + 6 = 10.
11x = 4.
x = 4/11.
Substituting the value of x in the ratio:
- The new ratio becomes (8(4/11) + 3/10) : (3(4/11)) : (3/10).
Simplifying further, we get:
(32/11 + 3/10) : (12/11) : (3/10).
(320/110 + 33/110) : (120/110) : (33/110).
(353/110) : (120/110) : (33/110).
353 : 120 : 33.
Therefore, the new ratio after C's admission is 353:120:33.
So, the correct answer is option B: 35:21:24.
Test: Admission Of New Partner - 3 - Question 2

A and B are partners sharing profits in the ratio 5:3, they admitted C giving him 3/10th share of profit. If C acquires 1/5th share from A and 1/10th from B, new profit sharing ratio will be:

Detailed Solution for Test: Admission Of New Partner - 3 - Question 2
Given information:
A and B are partners sharing profits in the ratio 5:3.
C is admitted and given 3/10th share of profit.
C acquires 1/5th share from A and 1/10th share from B.
To find:
New profit sharing ratio after C's admission.

Let's assume the total profit to be x.
1. Initially, A and B share the profit in the ratio 5:3. So, their profit shares are:
- A's share = (5/8) * x
- B's share = (3/8) * x
2. C is given 3/10th share of the profit, which means C's share is (3/10) * x.
3. C acquires 1/5th share from A, which means C's share from A is (1/5) * A's share.
- C's share from A = (1/5) * (5/8) * x = (1/8) * x
4. C acquires 1/10th share from B, which means C's share from B is (1/10) * B's share.
- C's share from B = (1/10) * (3/8) * x = (3/80) * x
5. The new profit sharing ratio is the sum of A's, B's, and C's shares:
- A's new share = A's share - C's share from A = (5/8) * x - (1/8) * x = (4/8) * x = (1/2) * x
- B's new share = B's share - C's share from B = (3/8) * x - (3/80) * x = (30/80) * x - (3/80) * x = (27/80) * x
- C's new share = C's share + C's share from A + C's share from B = (3/10) * x + (1/8) * x + (3/80) * x = (24/80) * x + (10/80) * x + (3/80) * x = (37/80) * x
6. Simplify the ratio by dividing all the shares by the smallest common factor:
- A's new share = (1/2) * x = (40/80) * x
- B's new share = (27/80) * x = (27/80) * x
- C's new share = (37/80) * x = (37/80) * x
Therefore, the new profit sharing ratio is 40:27:37, which simplifies to 17:11:12.
Answer: D) 17:11:12
Test: Admission Of New Partner - 3 - Question 3

C was admitted in a firm with 1/4th share of the profits of the firm. C contributes Rs. 15,000 as his capital, A and B are other partners with the profit sharing ratio as 3:2. Find the required capital of A and B, if capital should be in profit sharing ratio taking C’s as base capital:

Detailed Solution for Test: Admission Of New Partner - 3 - Question 3

Test: Admission Of New Partner - 3 - Question 4

A, B and C are partners sharing profits and losses in the ratio 6:3:3, they agreed to take D into partnership for 1/8th share of profits. Find the new profit sharing ratio.

Detailed Solution for Test: Admission Of New Partner - 3 - Question 4

Let the total profit be = 1

D's share = 1/8th of profits = 1/8

Remaining share to be distributed to A,B, and C in the old ratio = 7/8

A's share = 7/8 × 6/12 = 42/96

B's share = 7/8 × 3/12 = 21/96

C's share = 7/8 × 3/12 = 21/96

D's share = 1/8 × 12/12 = 12/96

A:B:C:D = 42:21:21:12

New Profit Sharing Ratio = 14:7:7:4

Test: Admission Of New Partner - 3 - Question 5

X and Y are partners sharing profits in the ratio 5:3. They admitted Z for 1/5th share of profits, for which he paid Rs. 1,20,000 against capital and Rs. 60,000 against goodwill.Find the capital balances for each partner taking Z’s capital as base capital.

Detailed Solution for Test: Admission Of New Partner - 3 - Question 5

Correct Answer :- c

Explanation : New Profit sharing ratio = 1 - 1/5 = 4/5

A= 5/8 * 4/5 = 20/40  ;   B= 3/8 * 4/5 = 12/40 ;  C= 1/5 * 8/8 = 8/40

i.e. 5 ; 3 ; 2.

Capitals = 120000 * 5 = 600000

A - 600000 * 5/10 = 300000

B - 600000 * 3/10 = 180000

C - 600000 * 2/10 = 120000

Test: Admission Of New Partner - 3 - Question 6

A and B are partners sharing profits and losses in the ratio of 3:2 (A’s Capital is Rs. 30,000 and B’s Capital is Rs. 15,000). They admitted C agreed to give 1/5th share of profits to him.How much C should bring in towards his capital?

Detailed Solution for Test: Admission Of New Partner - 3 - Question 6
Given:
- A's capital = Rs. 30,000
- B's capital = Rs. 15,000
- Profit sharing ratio between A and B = 3:2
To Find:
- Amount that C should bring in towards his capital

1. Let's calculate the total capital of A and B:
- A's capital = Rs. 30,000
- B's capital = Rs. 15,000
- Total capital = Rs. (30,000 + 15,000) = Rs. 45,000

2. Calculate the share of profit for A and B:
- A's share of profit = (3/5) * Total profit
- B's share of profit = (2/5) * Total profit

3. It is given that C will receive 1/5th of the total profit as his share.
- C's share of profit = (1/5) * Total profit

4. Since the total profit is divided into 5 parts, and A and B have a ratio of 3:2, their total profit share is divided into 3+2=5 parts.
- A's share of profit = (3/5) * Total profit = (3/5) * C's share of profit
- B's share of profit = (2/5) * Total profit = (2/5) * C's share of profit

5. From the above equations, we can equate the share of profit for A and B as follows:
- (3/5) * C's share of profit = Rs. 9,000 (A's share of profit)
- (2/5) * C's share of profit = B's share of profit

6. Solving the above equations, we can find the value of C's share of profit:
- C's share of profit = (5/3) * Rs. 9,000 = Rs. 15,000

7. Finally, the amount C should bring in towards his capital is equal to his share of profit:
- C's capital = Rs. 15,000 (C's share of profit)

Conclusion:
C should bring in Rs. 15,000 towards his capital. Therefore, option D is the correct answer.
Test: Admission Of New Partner - 3 - Question 7

A and B are partners sharing the profit in the ratio of 3:2. They take C as the new partner, who brings in Rs. 25,000 against capital and Rs. 10,000 against goodwill. New profit sharing ratio is 1:1:1. In what ratio will this amount will be shared among the old partners A & B.

Detailed Solution for Test: Admission Of New Partner - 3 - Question 7

Given:
- A and B are partners sharing the profit in the ratio of 3:2.
- C is the new partner who brings in Rs. 25,000 against capital and Rs. 10,000 against goodwill.
- The new profit sharing ratio is 1:1:1.
To find: In what ratio will this amount be shared among the old partners A & B.
Step 1: Calculate the total capital of A and B before the entry of C.
- Let the capitals of A and B be x and y respectively.
- According to the given profit sharing ratio, we have 3x : 2y = 3 : 2.
- Solving this equation, we get x = 3y/2.
Step 2: Calculate the total capital after the entry of C.
- The total capital after C's entry is x + y + Rs. 25000 (capital brought in by C) + Rs. 10000 (goodwill brought in by C).
- Substitute the value of x from Step 1, we get (3y/2) + y + Rs. 35000.
Step 3: Calculate the share of A and B in the total capital after C's entry.
- The share of A = (3y/2) / [(3y/2) + y + Rs. 35000].
- The share of B = y / [(3y/2) + y + Rs. 35000].
Step 4: Simplify the share of A and B.
- The share of A = (3y/2) / [(3y/2) + 2y + Rs. 35000].
- The share of A = (3y/2) / [(3y/2) + 4y/2 + Rs. 35000].
- The share of A = (3y/2) / [(7y/2) + Rs. 35000].
- The share of A = (3y/2) / [(7y + 2Rs. 35000)/2].
- The share of A = 6y / [7y + 2Rs. 35000].
- The share of B = y / [(3y/2) + 2y + Rs. 35000].
- The share of B = y / [(3y/2) + 4y/2 + Rs. 35000].
- The share of B = y / [(3y/2) + 4y/2 + Rs. 35000].
- The share of B = y / [(7y/2) + Rs. 35000].
- The share of B = y / [(7y + 2Rs. 35000)/2].
- The share of B = 2y / [7y + 2Rs. 35000].
Step 5: Simplify the ratios of A and B.
- The ratio of A's share to B's share = (6y / [7y + 2Rs. 35000]) : (2y / [7y + 2Rs. 35000]).
- Canceling out the common terms, we get the ratio of A's share to
Test: Admission Of New Partner - 3 - Question 8

A and B are partners sharing the profit in the ratio of 3:2. They take C as the new partner, who is supposed to bring Rs. 25,000 against capital and Rs. 10,000 against goodwill. New profit sharing ratio is 1:1:1. C is able to bring Rs. 30,000 only. How this will be treated in the books of the firm.

Detailed Solution for Test: Admission Of New Partner - 3 - Question 8

 

The correct answer is C. 

At the time of admission of a new partner, When capital goodwill is brought by the new partner it is divided among the partners in their gaining and sacrificing ratio. Calculation of sacrificing ratio:

Sacrificing Ratio =  Old Ratio - New Ratio

A's sacrificing ratio = (3/5) - (1/3) = 4/15

B's sacrificing ratio = (2/5) - (1/3) = 1/15

Therefore, sacrificing ratio of A and B is 4 : 1 or 4000:1000

Since no already existing goodwill is given we assume it to be zero and when the goodwill is zero then the Goodwill is raised at the remaining premium which is not brought in by the partner at its full value.

Which is ₹5000

So value of goodwill is 5000*3=₹15000 which is to be raised in old ratio.

Test: Admission Of New Partner - 3 - Question 9

Three partners A , B , C start a business . B's Capital is four times C's capital and twice A's capital is equal to thrice B's capital . If the total profit is Rs 16500 at the end of a year ,Find out B's share in it.

Detailed Solution for Test: Admission Of New Partner - 3 - Question 9

Suppose C's capital = x then
B's capital = 4x (Since B's Capital is four times C's capital)
A's capital = 6x ( Since twice A's capital is equal to thrice B's capital)
A:B:C =6 x : 4x : x
= 6 : 4 : 1
B's share = 16500 * (4/11) = 1500*4 = 6000.

Test: Admission Of New Partner - 3 - Question 10

A and B are partners sharing the profit in the ratio of 3:2. They take C as the new partner, who is supposed to bring Rs. 25,000 against capital and Rs. 10,000 against goodwill. New profit sharing ratio is 1:1:1. C bought cash for his share of Capital and agreed to compensate to A and B outside the firm. How this will be treated in the books of the firm.

Detailed Solution for Test: Admission Of New Partner - 3 - Question 10

Background information:
- A and B are partners sharing the profit in the ratio of 3:2.
- C is brought in as a new partner.
- C brings Rs. 25,000 against capital and Rs. 10,000 against goodwill.
- The new profit sharing ratio is 1:1:1.
Objective:
To determine how the transactions related to C's capital and goodwill will be treated in the books of the firm.
Steps to be taken:
1. Analyze the given options to determine the correct treatment of C's capital and goodwill.
2. Evaluate each option to find the most appropriate one.
Analysis of options:
Option A: Cash bought in by C will only be credited to his capital account.
- This option suggests that C's cash contribution will be credited to his capital account.
- It does not mention anything about the treatment of goodwill.
Option B: Goodwill will be raised to full value in old ratio.
- This option suggests that the goodwill will be adjusted to its full value in the old profit sharing ratio.
- It does not mention anything about the treatment of C's capital.
Option C: Goodwill will be raised to full value in new ratio.
- This option suggests that the goodwill will be adjusted to its full value in the new profit sharing ratio.
- It does not mention anything about the treatment of C's capital.
Option D: Cash bought by C will be credited to his account and debited with his share of goodwill, which will be debited to A and B's account in sacrificing ratio.
- This option suggests that C's cash contribution will be credited to his capital account.
- It also mentions that C's capital account will be debited with his share of goodwill.
- The goodwill amount will be debited to A and B's accounts in the sacrificing ratio.
Evaluation of options:
- Option A does not address the treatment of goodwill, so it cannot be the correct answer.
- Options B and C only address the treatment of goodwill and do not mention anything about C's capital, so they cannot be the correct answers.
- Option D addresses both the treatment of C's capital and goodwill, making it the most appropriate option.
Conclusion:
Based on the analysis and evaluation of the given options, the correct treatment of C's capital and goodwill in the books of the firm is as follows:
- C's cash contribution will be credited to his capital account.
- C's capital account will be debited with his share of goodwill.
- The goodwill amount will be debited to A and B's accounts in the sacrificing ratio.
Test: Admission Of New Partner - 3 - Question 11

Profit or loss on revaluation is shared among the partners in ……… ratio.

Detailed Solution for Test: Admission Of New Partner - 3 - Question 11
Answer:
The correct answer is Old Profit Sharing.
Explanation:
When a partnership firm revalues its assets and liabilities, it may result in a profit or loss on revaluation. This profit or loss on revaluation is shared among the partners in the Old Profit Sharing ratio. Let's break down the explanation into bullet points:
- Revaluation of assets and liabilities is done to bring their values closer to their current market values.
- The revaluation process may lead to an increase or decrease in the value of assets and liabilities.
- If the revaluation results in a profit (i.e., the value of assets increases or the value of liabilities decreases), this profit is shared among the partners.
- The sharing of profit on revaluation is done based on the Old Profit Sharing ratio.
- The Old Profit Sharing ratio is the ratio in which the partners were sharing the profits before the revaluation.
- On the other hand, if the revaluation results in a loss (i.e., the value of assets decreases or the value of liabilities increases), this loss is also shared among the partners in the Old Profit Sharing ratio.
- The Old Profit Sharing ratio is important because it reflects the partnership agreement and the understanding between the partners regarding the sharing of profits and losses.
In conclusion, the profit or loss on revaluation is shared among the partners in the Old Profit Sharing ratio.
Test: Admission Of New Partner - 3 - Question 12

Amit and Anil are partners of a partnership firm sharing profits in the ratio of 5:3 respectively. Atul was admitted on the following terms: Atul would pay Rs. 50,000 as capital and Rs. 16,000 as Goodwill, for 1/5th share of profit. Machinery would be appreciated by 10% (book value Rs. 80,000) and building would be depreciated by 20% (Rs. 2,00,000). Unrecorded debtors of Rs. 1,250 would be bought into books now and a creditors amounting to Rs. 2,750 died and need not to pay anything to its estate. Find the distribution of profit/loss on revaluation between Amit, Anil and Atul.

Detailed Solution for Test: Admission Of New Partner - 3 - Question 12

To find the distribution of profit/loss on revaluation between Amit, Anil, and Atul, we need to calculate the revaluation gain/loss and distribute it according to the profit-sharing ratio.
Step 1: Revaluation of Assets and Liabilities
- Machinery appreciation: 10% of Rs. 80,000 = Rs. 8,000 (new book value = Rs. 88,000)
- Building depreciation: 20% of Rs. 2,00,000 = Rs. 40,000 (new book value = Rs. 1,60,000)
- Unrecorded debtors brought into books: Rs. 1,250
- Creditors not required to pay: Rs. 2,750
Step 2: Calculation of Revaluation Gain/Loss
- Total revaluation gain/loss = (Appreciation - Depreciation) + (Unrecorded Debtors - Creditors)
= (Rs. 8,000 - Rs. 40,000) + (Rs. 1,250 - Rs. 2,750)
= Rs. -31,500 (Loss)
Step 3: Distribution of Revaluation Loss
- Amit's share = (5/8) * Rs. -31,500 = Rs. -19,687.50 (Loss)
- Anil's share = (3/8) * Rs. -31,500 = Rs. -11,812.50 (Loss)
- Atul's share = (1/5) * Rs. -31,500 = Rs. -6,300 (Loss)
Step 4: Final Distribution of Profit/Loss
- Amit's share = Profit (previous share) + Revaluation Loss (new share) = Rs. 0 - Rs. 19,687.50 = Rs. -19,687.50 (Loss)
- Anil's share = Profit (previous share) + Revaluation Loss (new share) = Rs. 0 - Rs. 11,812.50 = Rs. -11,812.50 (Loss)
- Atul's share = Profit (previous share) + Revaluation Loss (new share) = Rs. 0 - Rs. 6,300 = Rs. -6,300 (Loss)
Therefore, the distribution of profit/loss on revaluation between Amit, Anil, and Atul is Loss - Rs. 17,500 : Rs. 10,500 : Rs. 0. Hence, the correct answer is option A: Loss - Rs. 17,500 : Rs. 10,500 : Rs. 0.
Test: Admission Of New Partner - 3 - Question 13

A and B, who share profits and losses in the ratio of 3:2 has the following balances: Capital of A Rs. 50,000; Capital of B Rs. 30,000; Reserve Fund Rs. 15,000. They admit C as a partner, who contributes to the firm Rs. 25,000 for 1/6th share in the partnership. If C is to purchase 1/6th share in the partnership from the existing partners A and B in the ratio of 3:2 for Rs. 25,000, find closing capital of C.

Detailed Solution for Test: Admission Of New Partner - 3 - Question 13

Test: Admission Of New Partner - 3 - Question 14

Amit and Anil are partners of a partnership firm sharing profits in the ratio of 5:3 with capital of Rs. 2,50,000 & Rs. 2,00,000 respectively. Atul was admitted on the following terms: Atul would pay Rs. 50,000 as capital and Rs. 16,000 as Goodwill, for 1/5th share of profit. Find the balance of capital accounts after admission of Atul.

Detailed Solution for Test: Admission Of New Partner - 3 - Question 14

Given:
- Amit's capital = Rs. 2,50,000
- Anil's capital = Rs. 2,00,000
- Atul's capital = Rs. 50,000
- Atul pays Rs. 16,000 as goodwill for 1/5th share of profit
To find:
- Balance of capital accounts after Atul's admission
Step 1: Calculate the total capitals before Atul's admission:
- Amit's capital = Rs. 2,50,000
- Anil's capital = Rs. 2,00,000
- Total capital = Amit's capital + Anil's capital = Rs. 2,50,000 + Rs. 2,00,000 = Rs. 4,50,000
Step 2: Calculate Atul's share of profit:
- Atul's share of profit = 1/5th of total profit
- Total profit = Amit's share + Anil's share = (5/8) * total profit + (3/8) * total profit = (5/8 + 3/8) * total profit = (8/8) * total profit = total profit
- Atul's share of profit = 1/5 * total profit = (1/5) * total profit
Step 3: Calculate Atul's capital after paying goodwill:
- Atul's capital = Rs. 50,000
- Atul's share of profit = (1/5) * total profit
- Atul's capital + Atul's share of profit = Rs. 50,000 + (1/5) * total profit
- Therefore, Atul's capital after paying goodwill = Rs. 50,000 + (1/5) * total profit
Step 4: Calculate the balance of capital accounts after Atul's admission:
- Total capital after Atul's admission = Total capital before Atul's admission + Atul's capital after paying goodwill
- Total capital after Atul's admission = Rs. 4,50,000 + (Rs. 50,000 + (1/5) * total profit)
- Total capital after Atul's admission = Rs. 5,00,000 + (1/5) * total profit
Since the total profit is not given, we cannot calculate the exact balance of capital accounts after Atul's admission. Therefore, the answer options provided are incorrect.
Correct Answer: Cannot be determined.
Test: Admission Of New Partner - 3 - Question 15

A and B shares profit and losses equally. They admit C as an equal partner and assets were revalued as follow: Goodwill at Rs. 30,000 (book value NIL). Stock at Rs. 20,000 (book value Rs. 12,000); Machinery at Rs. 60,000 (book value Rs. 55,000). C is to bring in Rs. 20,000 as his capital and the necessary cash towards his share of Goodwill. Goodwill Account will not remain in the books. Find the profit/loss on revaluation to be shared among A, B and C.

Detailed Solution for Test: Admission Of New Partner - 3 - Question 15
Profit/Loss on Revaluation:
- Goodwill: Rs. 30,000 (book value NIL)
- Stock: Rs. 20,000 (book value Rs. 12,000)
- Machinery: Rs. 60,000 (book value Rs. 55,000)
Capital Contribution by C:
- Capital: Rs. 20,000
- Cash towards Goodwill: To be determined
Calculation of Cash towards Goodwill:
- Total revaluation profit/loss: Rs. (30,000 + 20,000 + 5,000) = Rs. 55,000
- As A, B, and C share profit and losses equally, each partner's share of the revaluation profit/loss is Rs. 55,000 / 3 = Rs. 18,333.33
- Since C is bringing in Rs. 20,000 as capital, the remaining amount to be paid towards goodwill is Rs. 18,333.33 - Rs. 20,000 = -Rs. 1,666.67 (negative value indicates a cash inflow)
Allocation of Profit/Loss on Revaluation:
A:
- Goodwill: Rs. 18,333.33
- Stock: Rs. 3,333.33
- Machinery: Rs. 1,666.67
B:
- Goodwill: Rs. 18,333.33
- Stock: Rs. 3,333.33
- Machinery: Rs. 1,666.67
C:
- Goodwill: Rs. 18,333.33
- Stock: Rs. 3,333.33
- Machinery: Rs. 1,666.67
Summary:
The profit/loss on revaluation to be shared among A, B, and C is as follows:
- A: Rs. 21,500:21,500:0
- B: Rs. 6,500:6,500:0
- C: Rs. 14,333:14,333:14,333
- D: Rs. 4,333:4,333:4,333
Therefore, the answer is b.
Test: Admission Of New Partner - 3 - Question 16

A and B shares profit and losses equally. They admit C as an equal partner and goodwill was valued as Rs. 30,000 (book value NIL). C is to bring in Rs. 20,000 as his capital and the necessary cash towards his share of Goodwill. Goodwill Account will not remain in the books. What will be the final effect of goodwill in the partner’s capital account?

Detailed Solution for Test: Admission Of New Partner - 3 - Question 16

To determine the final effect of goodwill in the partners' capital accounts, we need to analyze the different transactions involved in the admission of C as a partner.
1. Goodwill Valuation:
- Goodwill is valued at Rs. 30,000, with a book value of NIL.
2. C's Contribution:
- C brings in Rs. 20,000 as his capital.
- C also brings in cash towards his share of goodwill.
3. Allocation of Goodwill:
- Since A and B share profits and losses equally, the goodwill will be equally shared among them.
- Each partner's share of goodwill will be Rs. 15,000 (Rs. 30,000 / 2).
4. Adjustments in Capital Accounts:
- A and B's capital accounts will be credited with their share of goodwill, which is Rs. 15,000 each.
- C's capital account will be debited with Rs. 15,000 for his share of goodwill and credited with Rs. 20,000 as his capital contribution.
Based on the above analysis, the final effect of goodwill in the partners' capital accounts is as follows:
- A and B's capital accounts will be credited with Rs. 15,000 each for their share of goodwill.
- C's capital account will be debited with Rs. 15,000 for his share of goodwill and credited with Rs. 20,000 as his capital contribution.
Therefore, the correct answer is option A: A & B's account credited with Rs. 5,000 each.
Test: Admission Of New Partner - 3 - Question 17

A and B shares profit and losses equally. They admit C as an equal partner and goodwill was valued as Rs. 30,000 (book value NIL). C is to bring in Rs. 20,000 as his capital and the necessary cash towards his share of Goodwill. Goodwill Account will not remain in the books. If profit on revaluation is Rs. 13,000, find the closing balance of the capital account.

Detailed Solution for Test: Admission Of New Partner - 3 - Question 17

To find the closing balance of the capital account, we need to calculate the total capital of each partner after admitting C and accounting for the revaluation profit.
Given information:
- A and B share profit and losses equally.
- C is admitted as an equal partner.
- Goodwill was valued at Rs. 30,000 (book value NIL).
- C brings in Rs. 20,000 as his capital and the necessary cash towards his share of Goodwill.
- Goodwill Account will not remain in the books.
- Profit on revaluation is Rs. 13,000.
Let's calculate the closing balance of the capital account for each partner:
1. A's Closing Capital:
- A's capital before admitting C: Rs. 31,500 (as A and B share profit and losses equally)
- A's share of Goodwill: Rs. 30,000 (as Goodwill is valued at Rs. 30,000)
- A's share of profit on revaluation: Rs. 6,500 (as A and B share profit and losses equally)
- A's total capital: Rs. 31,500 + Rs. 30,000 + Rs. 6,500 = Rs. 68,000
2. B's Closing Capital:
- B's capital before admitting C: Rs. 31,500 (as A and B share profit and losses equally)
- B's share of Goodwill: Rs. 30,000 (as Goodwill is valued at Rs. 30,000)
- B's share of profit on revaluation: Rs. 6,500 (as A and B share profit and losses equally)
- B's total capital: Rs. 31,500 + Rs. 30,000 + Rs. 6,500 = Rs. 68,000
3. C's Closing Capital:
- C's capital: Rs. 20,000 (as C brings in Rs. 20,000 as his capital)
- C's share of Goodwill: Rs. 30,000 (as C contributes cash towards his share of Goodwill)
- C's share of profit on revaluation: Rs. 0 (as C is admitted after the revaluation)
- C's total capital: Rs. 20,000 + Rs. 30,000 + Rs. 0 = Rs. 50,000
Therefore, the closing balance of the capital account for each partner is:
- A: Rs. 68,000
- B: Rs. 68,000
- C: Rs. 50,000
Hence, the correct answer is option A: 31,500:31,500:20,000.
Test: Admission Of New Partner - 3 - Question 18

Balance sheet prepared after the new partnership agreement, assets and liabilities are recorded at:

Detailed Solution for Test: Admission Of New Partner - 3 - Question 18
The balance sheet prepared after the new partnership agreement records assets and liabilities at the revalued figure. Here is a detailed explanation:
Assets:
- Assets are the resources owned by the partnership that have economic value. They can include cash, accounts receivable, inventory, property, equipment, and investments.
- When preparing the balance sheet after the new partnership agreement, the assets are recorded at the revalued figure, which means their values are adjusted to reflect their fair market value or current market price.
- This revaluation takes into account any changes in the value of the assets since they were initially acquired. It provides a more accurate representation of the partnership's financial position.
Liabilities:
- Liabilities are the obligations or debts of the partnership. They can include accounts payable, loans, mortgages, and other debts.
- Like assets, liabilities are also recorded at the revalued figure on the balance sheet after the new partnership agreement.
- This revaluation ensures that the liabilities are reported at their current amounts, taking into consideration any changes in interest rates or repayment terms.
Importance of revaluing assets and liabilities:
- Revaluing assets and liabilities provides a more accurate representation of the partnership's financial position.
- It helps in determining the true value of the partnership's resources and obligations.
- Revaluing assets and liabilities also helps in making informed business decisions, assessing the partnership's solvency, and evaluating its financial performance.
Therefore, after the new partnership agreement, the balance sheet records assets and liabilities at the revalued figure to provide a more accurate and up-to-date snapshot of the partnership's financial position.
Test: Admission Of New Partner - 3 - Question 19

P and Q are partners sharing Profits in the ratio of 2:1. R is admitted to the partnership with effect from 1st April on the term that he will bring Rs. 20,000 as his capital for 1/4th share and pays Rs. 9,000 for goodwill, half of which is to be withdrawn by P and Q. How much cash can P & Q withdraw from the firm (if any).

Detailed Solution for Test: Admission Of New Partner - 3 - Question 19

Given Information:
- P and Q are partners sharing Profits in the ratio of 2:1.
- R is admitted to the partnership with effect from 1st April on the term that he will bring Rs. 20,000 as his capital for 1/4th share.
- R pays Rs. 9,000 for goodwill, half of which is to be withdrawn by P and Q.
To find: How much cash can P & Q withdraw from the firm (if any).
Step 1: Calculate the total capital of the partnership after R's admission.
- R brings Rs. 20,000 as his capital for 1/4th share.
- So, the total capital after R's admission = Rs. 20,000 / (1/4) = Rs. 80,000.
Step 2: Calculate the share of P and Q in the total capital.
- P and Q share profits in the ratio of 2:1.
- Let the share of P be 2x and the share of Q be x.
- So, 2x + x = 3x represents the total capital.
- 3x = Rs. 80,000.
- x = Rs. 80,000 / 3 = Rs. 26,666.67 (approximately).
Step 3: Calculate the share of P and Q in the total capital.
- Share of P = 2x = 2 * Rs. 26,666.67 = Rs. 53,333.33 (approximately).
- Share of Q = x = Rs. 26,666.67 (approximately).
Step 4: Calculate the amount of goodwill to be withdrawn by P and Q.
- R pays Rs. 9,000 for goodwill, half of which is to be withdrawn by P and Q.
- Half of Rs. 9,000 = Rs. 9,000 / 2 = Rs. 4,500.
Step 5: Calculate the cash that P and Q can withdraw from the firm.
- Cash that P can withdraw = Share of P - Half of goodwill
= Rs. 53,333.33 - Rs. 4,500 = Rs. 48,833.33 (approximately).
- Cash that Q can withdraw = Share of Q - Half of goodwill
= Rs. 26,666.67 - Rs. 4,500 = Rs. 22,166.67 (approximately).
Therefore, P and Q can withdraw cash from the firm in the ratio of approximately 48,833.33:22,166.67, which simplifies to 3,000:1,500.
Hence, the answer is A: 3,000:1,500.
Test: Admission Of New Partner - 3 - Question 20

P and Q are partners sharing Profits in the ratio of 2:1. R is admitted to the partnership with effect from 1st April on the term that he will bring Rs. 20,000 as his capital for 1/4th share and pays Rs. 9,000 for goodwill, half of which is to be withdrawn by P and Q. If profit on revaluation is Rs. 6,000 and opening capital of P is Rs. 40,000 and of Q is Rs. 30,000, find the closing balance of each capital.

Detailed Solution for Test: Admission Of New Partner - 3 - Question 20

Given:
- P and Q are partners sharing profits in the ratio of 2:1.
- R is admitted to the partnership with effect from 1st April.
- R brings Rs. 20,000 as his capital for 1/4th share.
- R pays Rs. 9,000 for goodwill, half of which is to be withdrawn by P and Q.
- Profit on revaluation is Rs. 6,000.
- Opening capital of P is Rs. 40,000 and of Q is Rs. 30,000.
To find:
Closing balance of each capital.
Step 1: Calculate the share of R in the profits and capital:
- R's share in the profits = 1/4 * total profits
- R's share in the capital = Rs. 20,000
Step 2: Calculate the total profits:
- Let the total profits be x.
- P's share in the profits = 2/3 * x
- Q's share in the profits = 1/3 * x
- R's share in the profits = 1/4 * x
Given that half of the goodwill payment is to be withdrawn by P and Q, we can calculate the goodwill payment as follows:
- Goodwill payment = Rs. 9,000
- Amount withdrawn by P and Q = 1/2 * Rs. 9,000 = Rs. 4,500
Step 3: Calculate the new capital of P and Q after the withdrawal:
- P's new capital = Opening capital + Share of profits - Amount withdrawn
- Q's new capital = Opening capital + Share of profits - Amount withdrawn
Step 4: Calculate the total capital:
- Total capital = P's capital + Q's capital + R's capital
Step 5: Calculate the closing balance of each capital:
- Closing balance of P = P's new capital / Total capital * x
- Closing balance of Q = Q's new capital / Total capital * x
- Closing balance of R = R's capital / Total capital * x
Now let's calculate the values:
Given:
- Opening capital of P = Rs. 40,000
- Opening capital of Q = Rs. 30,000
- Profit on revaluation = Rs. 6,000
- Goodwill payment = Rs. 9,000
- Amount withdrawn by P and Q = Rs. 4,500
- R's capital = Rs. 20,000
Step 1: Calculate the share of R in the profits and capital:
- R's share in the profits = 1/4 * total profits = 1/4 * x
- R's share in the capital = Rs. 20,000
Step 2: Calculate the total profits:
- P's share in the profits = 2/3 * x
- Q's share in the profits = 1/3 * x
- R's share in the profits = 1/4 * x
Given that half of the goodwill payment is to be withdrawn by P and Q, we can calculate the goodwill payment as follows:
- Goodwill payment = Rs. 9,000
- Amount withdrawn by P and Q =
Test: Admission Of New Partner - 3 - Question 21

Adam, Brain and Chris were equal partners of a firm with goodwill Rs. 1,20,000 shown in the balance sheet and they agreed to take Daniel as an equal partner on the term that he should bring Rs. 1,60,000 as his capital and goodwill, his share of goodwill was evaluated at Rs. 60,000 and the goodwill account is to be written off before admission. What will be the treatment for goodwill?

Detailed Solution for Test: Admission Of New Partner - 3 - Question 21
Treatment for Goodwill in the given scenario:
1. Background: Adam, Brain, and Chris are equal partners of a firm with a goodwill of Rs. 1,20,000 shown in the balance sheet.
2. Admission of Daniel: Daniel is to be admitted as an equal partner in the firm.
3. Capital and Goodwill Contribution: Daniel is required to bring Rs. 1,60,000 as his capital and goodwill.
4. Valuation of Goodwill: The value of Daniel's share of goodwill is evaluated at Rs. 60,000.
5. Goodwill Account Treatment: The goodwill account is to be written off before Daniel's admission.
The treatment for goodwill in this scenario is as follows:
- Write off the goodwill of Rs. 1,20,000 in old ratio: Since the goodwill account is to be written off, it means that the existing goodwill of Rs. 1,20,000 will be eliminated from the balance sheet. This will be done in the old ratio of Adam, Brain, and Chris, who were equal partners before Daniel's admission.
- Cash brought in by Daniel for goodwill will be distributed among old partners in sacrificing ratio: As Daniel is bringing Rs. 1,60,000 as his capital and goodwill, the amount specifically brought in for goodwill, which is Rs. 60,000, will be distributed among the old partners (Adam, Brain, and Chris) in their sacrificing ratio. The sacrificing ratio is the ratio in which the existing partners agree to give up their share in the profits of the firm to accommodate the admission of a new partner.
Therefore, the correct treatment for goodwill in this scenario is both options A and B. The existing goodwill of Rs. 1,20,000 will be written off in the old ratio, and the cash brought in by Daniel for goodwill will be distributed among the old partners in the sacrificing ratio.
Test: Admission Of New Partner - 3 - Question 22

Which of the following asset is compulsory to revalue at the time of admission of a new partner:

Detailed Solution for Test: Admission Of New Partner - 3 - Question 22
Explanation:
In the context of admission of a new partner, the revaluation of assets is necessary to determine the true value of the assets and to adjust the capital accounts of the existing partners. Among the given options, the asset that is compulsory to revalue at the time of admission of a new partner is Goodwill.
Here is the detailed explanation:
- Goodwill:
- Goodwill is an intangible asset that represents the reputation, customer base, and other intangible benefits of a business.
- When a new partner is admitted, the existing partners transfer a portion of their share in the goodwill to the new partner.
- The value of the goodwill needs to be revalued in order to determine the amount to be transferred to the new partner's capital account.
- The revaluation of goodwill helps in allocating the fair share of goodwill to the new partner and adjusting the capital accounts accordingly.
- Stock:
- Stock refers to the inventory or goods held by a business for sale.
- While revaluation of stock may be necessary in certain situations, such as if there is a significant change in market prices or if the stock is obsolete, it is not compulsory at the time of admission of a new partner.
- The value of stock can be determined based on the cost or market value, but it does not directly affect the admission of a new partner.
- Fixed Assets:
- Fixed assets refer to the long-term tangible assets owned by a business, such as land, buildings, machinery, etc.
- Revaluation of fixed assets may be necessary in certain situations, such as if there is a significant change in market value or if the assets have been impaired.
- However, revaluation of fixed assets is not compulsory at the time of admission of a new partner. The value of fixed assets can be determined based on their original cost or book value.
- Investment:
- Investment refers to the assets held by a business for earning a return, such as shares, bonds, etc.
- Revaluation of investments may be necessary in certain situations, such as if there is a significant change in market value or if the investments have been impaired.
- However, revaluation of investments is not compulsory at the time of admission of a new partner. The value of investments can be determined based on their original cost or market value.
Therefore, among the given options, the asset that is compulsory to revalue at the time of admission of a new partner is Goodwill.
Test: Admission Of New Partner - 3 - Question 23

X and Y are partners sharing profits in the ratio of 3 : 1. They admit Z as a partner who pays Rs. 4,000 as Goodwill the new profit sharing ratio being 2 : 1 : 1 among X, Y and Z respectively. The amount of goodwill will be credited to :

Detailed Solution for Test: Admission Of New Partner - 3 - Question 23

Let's break down the given information to find the answer:


Initial Ratio:
- X and Y share profits in the ratio of 3:1.
Admission of Z:
- Z pays Rs. 4,000 as Goodwill.
- The new profit sharing ratio is 2:1:1 among X, Y, and Z.

To find out who the goodwill amount will be credited to, we need to calculate the new capital of each partner after Z's admission.
Let's assume X's capital after Z's admission is Rs. X1 and Y's capital after Z's admission is Rs. Y1.
According to the given information, the new capital will be in the ratio of 2:1:1 among X, Y, and Z. So, we can write the equation as:
X1 : Y1 : 4000 = 2 : 1 : 1
Now, solve the equation to find the values of X1 and Y1.
- X1 = (2/4) * 4000 = 2000
- Y1 = (1/4) * 4000 = 1000
Conclusion:
The amount of goodwill, Rs. 4,000, will be credited only to X's capital after Z's admission. Therefore, the correct answer is B: X only.
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