12th | Admission of A  Partner | Question No. 51 To 55 | Ts Grewal Solution 2025-2026

Give the Journal entry in the following cases:

(a) To distribute Workmen Compensation Reserve' of ₹ 90,000 at the time of admission of R, when there is no claim against it. The firm has two partners P and Q.

(b) To distribute Workmen Compensation Reserve of ₹ 90,000 at the time of admission of R, when there is a claim of ₹ 60,000 against it. The firm has two partners P andQ.

(c) To distribute Investment Fluctuatiorn Reserve of 60,000 at the time of admission of R, when Investmnents (market value ₹ 2,85,000) exists at ₹ 3,00,000. The firm has two partners P and Q.

(d) To distribute 'General Reserve of ₹ 60,000 at the time of admission of R, when ₹ 15,000 from General Reserve is to be transferred to Investment Fluctuation Reserve. The firm has two partners P and Q.

Answer:

Date	Particulars		L.F.	(Dr.)  ₹	(Cr.)  ₹
(a)	Workmen Compensation Reserve	Dr.		90,000
	To P's Capital A/c				45,000
	To Q's Capital A/c				45,000
	(Being Workmen Compensation Reserve distributed in equally)
(b)	Workmen Compensation Reserve	Dr.		90,000
	To P's Capital A/c				15,000
	To Q's Capital A/c				15,000
	To Workmen Compensation Claim A/c				60,000
	(Being balance of Workmen Compensation Reserve is distributed in equally after transferring to claim account)
(c)	Investment Fluctuation Reserve A/c	Dr.		60,000
	To Investment A/c				15,000
	To P's Capital A/c				22,500
	To Q's Capital A/c				22,500
	(Being balance of Investment Fluctuation Reserve is distributed in equally after adjusting)
(d)	General Reserve A/c	Dr.		60,000
	To Investment Fluctuation Reserve A/c				15,000
	To P's Capital A/c				22,500
	To Q's Capital A/c				22,500
	(Being balance of General Reserve is distributed in equally after transferring amount to Investment Fluctuation Reserve)

 

Ram and Shyam were partners in a firm sharing profits and losses in the ratio of 2 : 1. Mohan was admitted for 1/3rd share in the profits. On the date ofMohan's admission, the Balance Sheet of RamandShyam showed General Reserve of   ` 2,50,000 and a credit balance of   ` 50,000 in Profit and Loss Account. Pass necessary Journal entries on the treatment of these items on Mohan's admission.

Answer:

Journal
Date	Particulars		L.F.	Debit `	Credit `
	General Reserve A/c	Dr.		2,50,000
	Profit and Loss A/c	Dr.		50,000
	To Ram’s Capital A/c				2,00,000
	To Shyam’s Capital A/c				1,00,000
	(Adjustment of balance in General Reserve A/c and P&L A/c in old ratio)

Working Notes:

WN1Calculation of Share of General Reserve & P&L A/c

Ram 's share=3,00,000×2/3=2,00,000

Shyam 's share=3,00,000×1/3=1,00,000

 

X and Y are partners in a firm sharing profits and losses in the ratio of 3 : 2. On 1st April, 2024, they admit Z as a partner for 1/5th share in profits. On that date, there was a balance of  ` 1,50,000 in General Reserve and a debit balance of   ` 20,000 in the Profit and Loss Account of the firm. Pass necessary Journal entries regarding adjustment of reserve and accumulated profit/loss.

Answer:

Journal
Date	Particulars		L.F.	Debit `	Credit `
2019 April 1	General Reserve A/c	Dr.		1,50,000
	To X’s Capital A/c				90,000
	To Y’s Capital A/c				60,000
	(Adjustment of balance in General Reserve A/c in old ratio)
	X’s Capital A/c	Dr.		12,000
	Y’s Capital A/c	Dr.		8,000
	To Profit and Loss A/c				20,000
	(Adjustment of debit balance in P&L A/c in old ratio)

 

Working Notes:

WN1Calculation of Share of General Reserve

X's share=1,50,000×3/5=90,000 ,

Y's share=1,50,000×2/5=60,000

WN2Calculation of Share of Debit Balance in P&L A/c

X's share=20,000×3/5=12,000,

Y's share=20,000×2/5=8,000

(a)

An extract of the Balance Sheet of Murari and Vohra sharing profits & losses in the ratio of 3 :2 was as under:

Liabilities	`	Assets	`
General Reserve	30,000	Investments (Market Value ` 1,14,000)	1,20,000
Contingency Reserve	2,700	Advertisement Expenditure	6,000
Profit & Loss A/c	18,000	| (Deferred Revenue
Investment Fluctuation Reserve	9,000
Workmen Compensation Reserve	7,200
Employees Provident Fund	20,000

New Partner Krishna was admitted for 1/5th share of profits. A claim on account of Workmen Compensation Reserve is estimated for Rs. 900.

Journal entries to adjust accumulated profits and losses.

 

(b) 

A, B and C were partners sharing profits and losses in the ratio of 6 : 3 : 1. They decide to take D into partnership with effect from 1st April, 2024. The new profit-sharing ratio between A, B, C and D will be 3 : 3 : 3 : 1. They also decide to record the effect of the following without affecting their book values, by passing a single adjustment entry:

	Book Values `
General Reserve	1,50,000
Contingency Reserve	60,000
Profit and Loss A/c (Cr.)	90,000
Advertisement Suspense A/c (Dr.)	1,20,000

Pass the necessary single adjustment entry through the Partner's Current Account. 

 

Answer:

Case (a)

Journal
Date	Particulars		L.F.	Debit `	Credit `
(i)
	Investment Fluctuation Reserve A/c	Dr.		6,000
	To Investment A/c				6,000
	(Being )
(ii)
	Workmen Compensation Reserve A/c	Dr.		900
	To Workmen Compensation Claim A/c				900
(iii)	General Reserve	Dr.		30,000
	Contingency Reserve	Dr.		2,700
	Profit & Loss A/c	Dr.		18,000
	Investment Fluctuation Reserve A/c	Dr.		3,000
	Workmen Compensation Reserve A/c	Dr.		6,300
	To Murari’s Capital A/c				36,000
	To Vohra’s Capital A/c				24,000
	(Being balance of reserves transferred to capital accounts )
(iv)	Murari’s Capital A/c	Dr.		3,600
	Vohra’s Capital A/c	Dr.		2,400
	To Advertisement Expenditure				6,000

 

Case (b)

 

Journal
Date	Particulars		L.F.	Debit `	Credit `
(A)
(i)	General Reserve A/c	Dr.		36,000
	Contingency Reserve A/c	Dr.		6,000
	Profit & Loss A/c	Dr.		18,000
	To X’s Capital A/c				30,000
	To Y’s Capital A/c				18,000
	To Z’s Capital A/c				12,000
	(Reserves distributed)
(ii)	X’s Capital A/c	Dr.		12,000
	Y’s Capital A/c	Dr.		7,200
	Z’s Capital A/c	Dr.		4,800
	To Advertisement Suspense A/c				24,000
	(Advertisement Suspense distributed)
(B)
April 1	Workmen Compensation Reserve A/c	Dr.		72,000
	To X’s Capital A/c				36,000
	To Y’s Capital A/c				36,000
	(Workmen Compensation Reserve distributed)
(C)
April 1	Workmen Compensation Reserve A/c	Dr.		72,000
	To Workmen Compensation Claim A/c				48,000
	To X’s Capital A/c				12,000
	To Y’s Capital A/c				12,000
	(Surplus Workmen Compensation Reserve distributed)
(D)
April 1	Investment Fluctuation Reserve A/c	Dr.		24,000
	To Investment A/c				10,000
	To X’s Capital A/c				7,000
	To Y’s Capital A/c				7,000
	(Surplus Investment Fluctuation Reserve distributed)
(E)
April 1	General  Reserve A/c	Dr.		4,800
	To Investment Fluctuation Reserve A/c				960
	To X’s Capital A/c				1,920
	To Y’s Capital A/c				1,920
	(Surplus General Reserve distributed)
(F)
April 1	C’s Current A/c	Dr.		36,000
	D’s Current A/c	Dr.		18,000
	To A’s Current A/c				54,000
	(Adjustment entry made)

 

Working Notes:

WN1: Calculation of Sacrifice or Gain

A :B :C=6:3:1 (Old Ratio)

A :B :C :D:=3:3:3:1 (New Ratio)

Sacrificing (or Gaining) Ratio = Old Ratio - New Ratio

A's share=6/10−3/10=6−3/10=3/10 (Sacrifice)

B's share=3/10−3/10=0

C's share=1/10−3/10=1−3/10=−2/10 (Gain)

D's share=0−1/10=−1/10 (Gain)

WN2: Calculation of Net Effect

General Reserve	1,50,000
Contingency Reserve	60,000
Profit and Loss A/c (Cr.)	90,000
	3,00,000
Less: Advertisement Suspense A/c (Dr.)	1,20,000
	1,80,000

 

WN 3: Adjustment of Net Effect
Amount credited in A's Current A/c = 1,80,000×3/10=​   ` 54,000

Amount debited in C's Current A/c = 1,80,000×2/10=​   ` 36,000

Amount debited in D's Current A/c = 1,80,000×1/10= ​  ` 18,000

Liabilities	`	Assets	`
Sundry Creditors	58,000	Cash in Hand	5,000
General Reserve	12,000	Cash at Bank	45,000
Capital Acs:		Sundry Debtors	60,000
Amit 1,80,000 Anil 1,50,000	3,30,000	Machinery	1,00,000
		Stock	40,000
		Building	1,50,000
	4,00,000		4,00,000

Ankit is admitted as a partner on the date of the Balance Sheet on the following terms:

(a) Ankit will bring in 1,00,000 as his capital and 60,000 as his share of goodwill for 1/4th share in profits.

(b) Machinery is to be appreciated to 1,20,000 and the value of building is to be appreciated by 10%.

(c) Stock is found overvalued by 4,000.

(d) General Reserve will continue to appear in the books of the reconstituted firm at its original value.

(e) A Provision for Doubtful Debts is to be created at 5% of debtors.

(f) Creditors were unrecorded to the extent of 1,000.

Prepare Revaluation Account and Partners Capital Accounts.

 

Answer:

 

Revaluation Account
Particulars	`	Particulars	`
Stock	4,000	Machinery	20,000
Provision for Doubtful Debts	3,000	Building	15,000
Creditors	1,000
Gain	27,000
	35,000		35,000

 

Capital account
Particulars	Amit	Anil	Ankit	Particulars	Amit	Anil	Ankit
To Balance c/d	2,40,000	1,80,000	1,00,000	By Balance b/d	1,80,000	1,50,000	-
				By Bank A/c	-	-	1,00,000
				By Premium A/c	40,000	20,000	-
				By Revaluation A/c	18,000	9,000	-
				By Ankit’s Current A/c	2,000	1,000
	2,40,000	1,80,000	1,00,000		2,40,000	1,80,000	1,00,000

 

 

 

Working note:

1.     Goodwill 60,000 shared in 2:1 in sacrificing ratio

Amit=60,000×2/3=40,000

Anil=60,000×1/3=20,000

 

Ankit’s Current A/c	Dr.	3,000
To Amit’s capital A/c			2,000
To Anil’s capital A/c			1,000
(Being sacrificing partners compensated for sacrifice)

 

 

2.     Profit of Revaluation shared in old ratio (2:1)

Amit=27,000×2/3=18,000

Anil=27,000×1/3=9,000

 

3.     General Reserve 12,000 adjusted in gaining and sacrificing ratio

Share of Ankit=12,000×1/4=3,000

 

3,000 compensated in 2:1 in sacrificing ratio

Amit=3,000 ×2/3=2,000

Anil=3,000 ×1/3=1,000

 

Note: since no information regarding how Ankit will compensate, will be compensated through Ankit’s current account.