On the admission of a new partner, the balance of the profit and loss adjustment account should be transferred to the capital account of_________.

all partners in their new profit-sharing ratio

No worries! We‘ve got your back. Try BYJU‘S free classes today!

old partners in their old profit-sharing ratio

Right on! Give the BNAT exam to get a 100% scholarship for BYJUS courses

old partners in their new profit-sharing ratio

No worries! We‘ve got your back. Try BYJU‘S free classes today!

old partners in their sacrificing ratio

No worries! We‘ve got your back. Try BYJU‘S free classes today!

Open in App

Solution

The correct option is B old partners in their old profit-sharing ratio
b'One of the forms of reconstitution of the firm is Change in Profit Sharing Ratio among Existing Partners. Here there is no change in the partners carrying on the business of the firm. The only change is the profit sharing ratio among existing partners.'

Suggest Corrections

Similar questions

Q. Consider the following statements :
1. At the time of admission of new partner undistributed profit or losses are distributed to all partners in new ratio.
2. Profit or loss on revaluation of assets and liabilities is transferred to old partner's capital account in old profit sharing ratio.
3. Goods brought in by incoming partner in cash for joining in a partnership firm is taken away by the old partner's in their new profit-sharing ratio.
Which of the above statement/s is/are true ?

Why is Reserves and Surplus credited to the old Partners' Capital Accounts in their old profit sharing ratio at the time of admission of a partner?

If the value of goodwill is Rs. 3,00,000. The PSR of A, B and C is 1:1:1. A retires and new profit sharing ratio is 1:1. B and C Capital accounts will be debited with what amount?

A and B were partners in a firm sharing profits and losses in the ratio of 3 : 2. They admit C as a new partner. The profit and loss sharing shall be so adjusted that A receives half of B's share and C receives one-third of A's share. Calculate new profit sharing ratio and sacrificing ratio.

PRACTICAL PROBLEM

Raj and Dev are partners sharing profits and losses 3:2 respectively. Their position on 31^st March, 2011

Balance Sheet as on 31^st March, 2011
Liabilities		Amount Rs	Assets		Amount Rs
Capital A/c’s	Raj	1,00,000	Buildings		1,00,000
	Dev	75,000	Furniture		10,000
Creditors		10,000	Stock		31,000
Bills Payable		5,000	Debtors	50,000
General Reserve		15,000	(-) R.D.D.	1,000	49,000
			Bank Balance		15,000
		2,05,000			2,05,000

On 1^st April, 2011 they admitted Manoj on following terms:

1) Manoj should bring in cash Rs 1,00,000 as a capital for 1/5^th share in future profit and Rs 25,000 as goodwill.

2) Building should be revalued for Rs 1,25,000.

3) Depreciate furniture at 12 ½ % p.a. and stock at 10% p.a.

4) R.D.D. should be maintained as it is.

5) The Capital accounts of partners should be adjusted in their new profit sharing ratio through bank account.

Prepare, Profit and Loss Adjustment Account, Capital Accounts, Balance Sheet of new firm and show how you have calculated new ratio and new capital.

Join BYJU'S Learning Program