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Accountancy · 2026 · 6 marks
Reconstitution of a Partnership Firm – Admission of a PartnerNew Profit Sharing Ratio on Admission of a Partner6 markslong answer
CBSE 2026 · Region 1 · Set 1 · Q25
Sanjay and Vijay were partners in a firm sharing profits and losses in the ratio of 4: 3. On 1st April, 2025 they admitted Babul as a new nth...,..…
Sanjay and Vijay were partners in a firm sharing profits and losses in the ratio of $\displaystyle 4$ : 3. On 1st April, $\displaystyle 2025$ they admitted Babul as a new nth . . . , . . partner for $\displaystyle 5$ share in the profits of the firm. On Babul s admission, the following was agreed upon : (i) The new profit sharing ratio of Sanjay, Vijay and Babul will be $\displaystyle 3$ : $\displaystyle 3$ : 4. (ii) The goodwill of the firm will be valued at four years purchase of the average profits of the last three years. The profits of the previous three years were :
| Year | Profit (₹) |
| $\displaystyle 2022$-$\displaystyle 23$ | $\displaystyle 16,500$ |
| $\displaystyle 2023$-$\displaystyle 24$ | $\displaystyle 17,500$ |
| $\displaystyle 2024$-$\displaystyle 25$ | $\displaystyle 18,500$ |
(iii)
Babul will bring his share of goodwill premium in cash, half of which will be withdrawn by Sanjay and Vijay. (iv) On Babul's admission, revaluation of assets and reassessment of liabilities resulted in a loss of ₹ $\displaystyle 70$,000. (v) At the time of Babul's admission, the firm had a General Reserve of? $\displaystyle 28$,000. (vi) After making necessary adjustments relating to goodwill, loss on revaluation and general reserve, the capital accounts of Sanjay and Vijay showed balances of ₹ $\displaystyle 3,50,000$ and ₹ $\displaystyle 2,50,000$ respectively. Babul brought proportionate capital for his $\displaystyle 2$/53h share in the profits of the firm. Showing your workings clearly pass necessary journal entries for the above transactions in the books of the firm on Babul's admission.
Anuj, Divij and Shilpa were partners in a firm sharing profits and losses in the ratio of $\displaystyle 2$ : $\displaystyle 1$ : 2. Their Balance Sheet as at $\displaystyle 31$" March, $\displaystyle 2023$ was as follows : Balance Sheet ofAnuj, Divij and Shilpa as at $\displaystyle 315$* March, $\displaystyle 2023$
| Liabilities | Amount (₹) | Assets | Amount (₹) |
| Capitals : | Land & Building | $\displaystyle 8,00,000$ | |
| Anuj $\displaystyle 3,00,000$ | Furniture | $\displaystyle 2,40,000$ | |
| Divij $\displaystyle 4,00,000$ | Stock | $\displaystyle 1,20,000$ | |
| Shilpa $\displaystyle 5,00,000$ | $\displaystyle 12,00,000$ | Debtors | $\displaystyle 1,70,000$ |
| Bills Payable | $\displaystyle 60,000$ | Cash | $\displaystyle 50,000$ |
| Creditors | $\displaystyle 1,20,000$ | ||
| $\displaystyle 13,80,000$ | $\displaystyle 13,80,000$ |
Anuj retired on the above date on the following terms : (i) Anuj's share of goodwill was valued at ₹ $\displaystyle 90,000$ and the same was to be treated without opening goodwill account. (ii) Revaluation of assets and reassessment of liabilities resulted in a gain of? $\displaystyle 25$,000. (iii) Amount due to Anuj was transferred to his loan account, to be paid in two equal yearly instalments plus interest @ l'2."/n p.a. on the unpaid balance starting from 31st March, 2024. Prepare Partners' Capital Accounts and Anuj's Loan Account till it is fully discharged.
Marking-scheme solution
Books of Sanjay, Vijay and Babul
Journal
Date Particulars L.F. Dr. Cr.
Amount Amount
(₹) (₹)
$\displaystyle 2025$
Apr.1 Cash/ Bank A/c Dr. $\displaystyle 28,000$
To Premium for goodwill A/c $\displaystyle 28,000$
(Premium for goodwill brought in by Babul)
” Premium for goodwill A/c Dr. $\displaystyle 28,000$
To Sanjay’s Capital A/c $\displaystyle 19,000$
To Vijay’s Capital A/c $\displaystyle 9,000$
(Premium for goodwill transferred to Sanjay’s and
Vijay’s Capital account in the sacrificing ratio)
” Sanjay’s Capital A/c Dr. $\displaystyle 9,500$
Vijay’s Capital A/c. Dr. $\displaystyle 4,500$
To Cash/ Bank A/c $\displaystyle 14,000$
(Cash withdrawn for $\displaystyle 50$% of their share of goodwill)
” Sanjay’s Capital A/c Dr. $\displaystyle 40,000$
Vijay’s Capital A/c Dr. $\displaystyle 30,000$
To Revaluation A/c $\displaystyle 70,000$
(Loss on revaluation debited to partners’ capital
accounts)
General Reserve A/c Dr. $\displaystyle 28,000$
To Sanjay’s Capital A/c $\displaystyle 16,000$
To Vijay’s Capital A/c $\displaystyle 12,000$
(General Reserve credited to partners’ capital accounts)
Cash/ Bank A/c Dr. $\displaystyle 4,00,000$
To Babul’s Capital A/c $\displaystyle 4,00,000$
(Proportionate capital brought in by Babul)
Working Note:
Calculation of Sacrificing Ratio:
Sanjay’s sacrifice= $\displaystyle 4$/$\displaystyle 7$ – $\displaystyle 3$/$\displaystyle 10$ =$\displaystyle 19$/$\displaystyle 70$
Vijay’s sacrifice= $\displaystyle 3$/$\displaystyle 7$ – $\displaystyle 3$/$\displaystyle 10$ = $\displaystyle 9$/$\displaystyle 70$
Sacrificing Ratio= $\displaystyle 19$:$\displaystyle 9$
Calculation of goodwill
Average profits=(₹$\displaystyle 16,500$+₹$\displaystyle 17,500$+₹$\displaystyle 18,000$)/$\displaystyle 3$= ₹$\displaystyle 17,500$
Firm’s goodwill= ₹$\displaystyle 17,500$ x $\displaystyle 4$ = ₹$\displaystyle 70,000$
Babul’s share of goodwill= $\displaystyle 2$/$\displaystyle 5$ x ₹$\displaystyle 70,000$ = ₹$\displaystyle 28,000$
Calculation of Babul’s proportionate capital
Capitals of Sanjay and Vijay after all adjustments= ₹$\displaystyle 3,50,000$ + ₹$\displaystyle 2,50,000$= ₹$\displaystyle 6,00,000$
Babul’s capital= ₹$\displaystyle 6,00,000$ x $\displaystyle 5$/$\displaystyle 3$ x $\displaystyle 2$/$\displaystyle 5$= ₹$\displaystyle 4,00,000$
Q. (b) Anuj, Divij and Shilpa were partners …
Ans. Books of Anuj, Divij and Shilpa
. Dr. Partners’ Capital Accounts Cr.
Particulars Anuj Divij Shilpa Particulars Anuj Divij Shilpa
(₹) ( ₹) ( ₹) (₹) ( ₹) ( ₹)
To Anuj’s - $\displaystyle 30,000$ $\displaystyle 60,000$ By Balance b/d $\displaystyle 3,00,000$ $\displaystyle 4,00,000$ $\displaystyle 5,00,000$
Capital A/c
To Anuj’s $\displaystyle 4,00,000$ - - By Divij’s $\displaystyle 30,000$ - -
Loan A/c Capital A/c
To Balance - $\displaystyle 3,75,000$ $\displaystyle 4,50,000$ By Shilpa’s $\displaystyle 60,000$ - -
c/d Capital A/c
By Revaluation $\displaystyle 10,000$ $\displaystyle 5,000$ $\displaystyle 10,000$
A/c (gain)
$\displaystyle 4,00,000$ $\displaystyle 4,05,000$ $\displaystyle 5,10,000$ $\displaystyle 4,00,000$ $\displaystyle 4,05,000$ $\displaystyle 5,10,000$
Dr. Anuj’s Loan A/c Cr.
Date Particulars Amount Date Particulars Amount
(₹) (₹)
$\displaystyle 2023$ $\displaystyle 2023$
Mar.31 To Balance c/d $\displaystyle 4,00,000$ Mar.31 By Anuj’s Capital A/c $\displaystyle 4,00,000$
$\displaystyle 4,00,000$ $\displaystyle 4,00,000$
$\displaystyle 2024$ $\displaystyle 2023$
Mar.31 To Cash/ Bank $\displaystyle 2,48,000$ Apr. $\displaystyle 1$ By Balance b/d $\displaystyle 4,00,000$
A/c.
Mar.31 To Balance c/d $\displaystyle 2,00,000$ $\displaystyle 2024$
Mar.31 By Interest A/c $\displaystyle 48,000$
$\displaystyle 4,48,000$ $\displaystyle 4,48,000$
$\displaystyle 2025$ $\displaystyle 2024$
Mar.31 To Cash/ Bank $\displaystyle 2,24,000$ Apr.1 By Balance b/d $\displaystyle 2,00,000$
A/c
$\displaystyle 2025$
Mar.31 By Interest A/c $\displaystyle 24,000$
$\displaystyle 2,24,000$ $\displaystyle 2,24,000$
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