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Question 15 of 20
Q.

Given below is the Balance Sheet of Pinky and Sony, who are carrying a partnership business on 31-12-2017. Pinky and Sony are sharing profits and losses in the ratio of 2 : 1.

LiabilitiesAmount (₹)AssetsAmount (₹)
Bills payable18,000Cash in hand50,000
Creditors50,000Sundry Debtors50,000
Out Standing Expenses2,000Stock30,000
Capitals : Pinky – 1,50,000; Sony – 1,00,0002,50,000Plant80,000
Buildings1,10,000
3,20,0003,20,000

Sujee is admitted as a partner on the date of the balance sheet on the following terms :

  1. Sujee will bring in ₹ 80,000 as his Capital and ₹ 51,000 as his share of Goodwill for 1/4 Share in the profit.
  2. Plant is to be appreciate to ₹ 1,00,000 and the value of buildings is to be appreciate by 10%.
  3. Stock is found overvalued by ₹ 4,000.
  4. A provision for bad and doubtful debts is to be Created at 5% of debtors.
  5. Creditors were unrecorded to the extent of ₹ 3,500. Prepare necessary ledger accounts and show Balance Sheet after Sujee's Admission.
Andhra Pradesh BieapBIEAP AP Intermediate (2nd Year) Commerce Board 2020Subjective· 20mImportance★★★★★est
75% · 15/20 Questions
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Prepare the Revaluation Account, Partners' Capital Accounts and the new Balance Sheet. Revaluation gives a profit of 21,000 (Plant up 20,000, Buildings up 11,000, against Stock down 4,000, provision for doubtful debts 2,500 and unrecorded creditors 3,500), shared 2:1. Sujee's 51,000 goodwill premium goes to the old partners in their sacrificing ratio (= old ratio 2:1). The Balance Sheet after admission totals 4,75,500.

This is a full admission-of-a-partner question from the AP Inter 2nd-year (Class 12) Accountancy previous-year paper; the AP syllabus here aligns with the standard partnership accounting taught across the NCERT/CBSE commerce curriculum.

Step 1 — Revaluation Account

Appreciations are credits (gains); reductions and new liabilities are debits (losses).

ParticularsAmount (Rs)ParticularsAmount (Rs)
To Stock (overvalued)4,000By Plant (1,00,000 - 80,000)20,000
To Provision for doubtful debts (5% of 50,000)2,500By Buildings (10% of 1,10,000)11,000
To Creditors (unrecorded)3,500
To Profit transferred to Capitals: Pinky 14,000; Sony 7,00021,000
Total31,000Total31,000

Profit on revaluation = 31,000 - 10,000 = 21,000; shared 2:1 -> Pinky 14,000, Sony 7,000.

Step 2 — Goodwill

Sujee pays 51,000 as premium for a 1/4 share. Old partners sacrifice in their old ratio 2:1, so the premium is credited: Pinky 51,000 x 2/3 = 34,000; Sony 51,000 x 1/3 = 17,000. The cash is retained in the business.

Step 3 — Partners' Capital Accounts

ParticularsPinky (Rs)Sony (Rs)Sujee (Rs)ParticularsPinky (Rs)Sony (Rs)Sujee (Rs)
To Balance c/d1,98,0001,24,00080,000By Balance b/d1,50,0001,00,000-
By Cash (capital)--80,000
By Premium (goodwill)34,00017,000-
By Revaluation A/c (profit)14,0007,000-
Total1,98,0001,24,00080,000Total1,98,0001,24,00080,000

Step 4 — Cash in hand

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