Admission of a partner-Important Questions-6

8. Adjustment of old partner’s Capital on the basis of new partner capital or New profit-sharing Ratio.

9. Calculation of the New partner’s capital on the basis of the old partner’s adjusted capital.

Admission of a partner-Important Questions-6

Calculation of the New partner’s capital on the basis of the old partner’s adjusted capital:

Sometimes the capital of the new partner is not given in the question. He/she is required to bring an amount proportionate to his/her share of profit. In such a case, the new partner’s capital will be calculated on the basis of the adjusted capital of the existing(old) partners.

Calculation of New Partner’s Capital on the basis of Old Partners
Step 1. Calculate the adjusted capitals of old Partners (after all adjustments have
been made)
Step 2. Calculate the total closing Capital of the New Firm as under:
Total capital of New Firm = Combined adjusted Closing Capitals of Old Partners ×
Reciprocal of remaining share of profit of old partners.
Step 3. Calculate the proportionate Capital of the New Partner as under:
New Partner’s Capital =Total capital of new firm × New partner’s proportion of share of
profit.

Question 1.

The capital accounts of Mohit and Rachit show the balance after all the adjustments and revaluation as ₹ 80,000 and ₹ 70,000 respectively. They admit Rohit as a new partner for 1/4 share in the profits. Rohit brings proportionate capital in cash. Calculate Rohit’s share of capital.

Solution:

Rohit’s capital is calculated as follows:

Adjusted capital of Mohit=₹ 80,000

Adjusted capital of Rachit=₹ 70,000

Total share = 1

Rohit’s share in the profit = 1/4

Remaining share of Mohit and Rachit = 1 – 1/4 = 3/4

The combined capital of Mohit and Rachit For 3/4 share of profit=

₹ 80,000 + ₹ 70,000 = ₹ 1,50,000

So,Total Capital of the firm = ₹1,50,000 × 4/3

= ₹ 2,00,000

Rohit’s capital for 1/4 share of profits

= ₹ 2,00,000 × 1/4
= ₹ 50,000

Rohit brings in ₹ 50,000 as his Capital.

Admission of a partner-Important Questions-6

Question 2.

The capital accounts of Jay and Vijay show the balance after all the adjustments and revaluation as ₹1, 82,000, and ₹178,000 respectively. They admit Sanjay as a new partner for 1/5 share in the profits. Sanjay brings proportionate capital in cash. Calculate Sanjay’s share of capital.

Solution:

Sanjay’s capital is calculated as follows:

Adjusted capital of Jay=₹ 1,82,000

Adjusted capital of Vijay=₹ 1,78,000

Total share = 1

Sanjay’s share in the profit = 1/5

Remaining share of Jay and Vijay = 1 – 1/5 = 4/5

Combined capital of Jay and Vijay For 4/5 share of profit=

₹ 1,82,000 + ₹ 1,78,000 = ₹ 3,60,000

So,Total Capital of the firm = ₹3,60,000 × 5/4

= ₹ 4,50,000

Sanjay’s capital for 1/5 share of profits = ₹ 4,50,000 × 1/5
= ₹ 90,000

Sanjay brings in ₹ 90,000 as his Capital.

Admission of a partner-Important Questions-6

Question 3.

The capital accounts of Jay, Vijay, and Sanjay show the balance after all the adjustments and revaluation as ₹1, 82,000, ₹178,000, and ₹140,000 respectively. They admit Ajay as a new partner for 1/5 share in the profits. Ajay brings proportionate capital in cash. Calculate Ajay’s share of capital.

Solution:

Ajay’s capital is calculated as follows:

Total share = 1

Adjusted capital of Jay=₹ 1,82,000

Adjusted capital of Vijay=₹ 1,78,000

Adjusted capital of Sanjay=₹ 1,40,000

Ajay’s share in the profit = 1/5

Remaining share of Jay , Vijay and Sanjay = 1 – 1/5 = 4/5

Combined capital of Jay, Vijay and and Sanjay For 4/5 share of profit=

₹ 1,82,000 + ₹ 1,78,000 + ₹ 1,40,000 = ₹ 5,00,000

So,Total Capital of the firm = ₹5,00,000 × 5/4

= ₹ 6,25,000

Ajay’s capital for 1/5 share of profits = ₹ 6,25,000 × 1/5
= ₹ 1,25,000

Ajay brings in ₹ 1,25,000 as his Capital.

Admission of a partner-Important Questions-6

Question 4.

A and B are partners sharing profit in the ratio of 4:3. On lst April 2020 they admit C as a new partner for 1/5 share in profits. On that date, the balance sheet of the firm shows a balance of ₹ 56,000 in general reserve and Advertisement Suspense Account of ₹14,000, . on that date balance of A’s Capital ₹ 50,000 B’s Capital ₹ 40,000. Profit on revaluation ₹21,000. C brings proportionate capital in cash. Calculate C’s share of capital.

Solution:

C’s capital is calculated as follows:

Adjusted capital of A=(Capital)50,000+(General Reserve)32,000+Profit on Revaluation)12,000-(Advertisement Suspense)8,000

Adjusted capital of A= 86,000
Adjusted capital of B=(Capital)40,000+(General Reserve)24,000+Profit on Revaluation)9,000-(Advertisement Suspense)6,000

Adjusted capital of B= 67,000

Total share = 1

C’s share in the profit = 1/5

Remaining share of Jay , Vijay and Sanjay = 1 – 1/5 = 4/5

Combined capital of A and B For 4/5 share of profit=

₹ 86,000 + ₹ 67,000 = ₹ 1,53,000

So,Total Capital of the firm = ₹1,53,000 × 5/4

= ₹ 1,91,250

Ajay’s capital for 1/5 share of profits = ₹ 1,91,250 × 1/5
= ₹ 38,250

C brings in ₹ 38,250 as his Capital.

Admission of a partner-Important Questions-6

Admission of a partner-Important Questions-1