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Partnership Accounts – Complete Problems (Unit I)

Problem 1: Admission with Revaluation & Capital Adjustment

Question: A and B are partners (3:2). Balance Sheet shows:

  • Creditors: 20,000
  • General Reserve: 10,000
  • Capital: A (60,000), B (40,000)
  • Assets: Building (50,000), Stock (30,000), Debtors (40,000), Cash (10,000).

C is admitted for 1/5 share.

  1. C brings 30,000 Capital and 10,000 Goodwill cash.
  2. Building appreciated by 20%.
  3. Stock depreciated by 10%.
  4. Provision for Bad Debts @ 5%.

Prepare Revaluation A/c and Partners' Capital A/c.

Solution: Admission Accounts Preparation 💡

1. Revaluation Account

Dr.Particulars₹Particulars₹Cr.
To Stock (10% of 30k)3,000By Building (20% of 50k)10,000
To Prov. for BD (5% of 40k)2,000
To Profit on Revaluation
- A (3/5)3,000
- B (2/5)2,000
Total10,000Total10,000

2. Partners' Capital Account

ParticularsABCParticularsABC
By Bal b/d60,00040,000-
By Gen Reserve (3:2)6,0004,000-
By Revaluation (P)3,0002,000-
By Bank (Cap)--30,000
By Prem. Goodwill6,0004,000-
To Bal c/d75,00050,00030,000

Problem 2: Retirement (Calculation of Amount Due)

Question: X, Y, Z (5:3:2). Y retires.

  • Balances: X (50k), Y (30k), Z (20k).
  • General Reserve: 20,000.
  • Goodwill of firm valued at 50,000.
  • Revaluation Loss: 10,000.
  • X and Z share future profits equally (1:1).

Calculate amount due to Y.

Solution: Retirement Capital Adjustment 💡

  1. Gaining Ratio:
    • New Ratio (X:Z) = 1:1. Old (5:3:2).
    • X Gain = 1/2 - 5/10 = 0.
    • Z Gain = 1/2 - 2/10 = 3/10. (Only Z gains).
    • Conclusion: Entire Goodwill paid by Z.
  2. Y's Share of Goodwill: 2/10 of 50,000 = 10,000.
    • Entry: Z's Cap Dr 10k to Y's Cap 10k.

Y's Capital Account (Rough Working)

  • Credit:
    • Opening: 30,000
    • Reserve (3/10 of 20k): 6,000
    • Goodwill (from Z): 10,000
    • Total Cr: 46,000
  • Debit:
    • Revaluation Loss (3/10 of 10k): 3,000
  • Net Due: 46,000 - 3,000 = ₹43,000.

Problem 3: Death (Profit Suspense)

Question: P, Q, R (2:2:1). R dies on 30th June.

  • Last year profit: ₹2,00,000.
  • Calculate R's share of profit till death.

Solution: Share of Profit till Death 💡

  1. Time Period: April, May, June = 3 Months.
  2. Formula: Profit × Time × Share.
  3. Calculation: 2,00,000 × (3/12) × (1/5).
  4. Amount: 2,00,000 × 0.25 × 0.2 = ₹10,000.

Journal Entry:

P&L Suspense A/c ...Dr  10,000
    To R's Capital A/c      10,000

Tips for Exams

  1. Format Marks: Draw lines for Account tables. Don't scribble.
  2. Working Notes: Always show calculation of Ratios (SR/GR) and Goodwill separately. It carries 30% marks.
  3. Balance Sheet: In admission problems, check if Cash Balance is updated (Add Capital + Goodwill).

Quiz Time! 🎯

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