Admission of a Partner TS Grewal Solutions: Class 12 [CBSE]

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BookTS Grewal Accountancy
Class12
Chapter5: Admission of a Partner Class 12
Volume1

Admission of a Partner Class 12 TS Grewal Solutions

TS Grewal Class 12 Solutions Chapter 5
TS Grewal Class 12 Solutions Chapter 5
TS Grewal Class 12 Solutions Chapter 5
TS Grewal Class 12 Solutions Chapter 5
TS Grewal Class 12 Solutions Chapter 5
TS Grewal Class 12 Solutions Chapter 5
TS Grewal Class 12 Solutions Chapter 5
TS Grewal Class 12 Solutions Chapter 5
TS Grewal Class 12 Solutions Chapter 5
TS Grewal Class 12 Solutions Chapter 5
TS Grewal Class 12 Solutions Chapter 5
TS Grewal Class 12 Solutions Chapter 5
TS Grewal Class 12 Solutions Chapter 5
TS Grewal Class 12 Solutions Chapter 5
TS Grewal Class 12 Solutions Chapter 5
TS Grewal Class 12 Solutions Chapter 5
TS Grewal Class 12 Solutions Chapter 5
TS Grewal Class 12 Solutions Chapter 5
TS Grewal Class 12 Solutions Chapter 5
TS Grewal Class 12 Solutions Chapter 5

Class 12 ch 5 Accounts Solutions TS Grewal

When a new partner joins an existing partnership, it is termed as the ‘Admission of a Partner’. The entry of a new partner brings about various changes in the profit-sharing ratio, capital, and assets of the partnership firm. TS Grewal Class 12 Chapter 5 delves deep into understanding these changes.

New Profit Sharing Ratio (PSR)

  • Definition: The ratio in which all partners (old and new) agree to share future profits and losses.
  • Formula: New PSR = Old PSR ± Gaining or Sacrificing Ratio
  • Example: A and B share profits in the ratio of 3:2. If C is admitted and the new ratio becomes 2:2:1. A’s new share is 2/5 and the old share was 3/5. Therefore, A has sacrificed 1/5 of his share for C.
  • Trick: Always remember, “Gaining Ratio + Sacrificing Ratio = 0” because one partner’s gain is another partner’s sacrifice.

Treatment of Goodwill

  • Definition: Goodwill represents the reputation of a business. Upon the admission of a new partner, they usually bring in their share of goodwill, signifying their share of future profits because of the firm’s existing reputation.
  • Formula: Goodwill = Average Profit x Number of Years Purchased
  • Example: If average profit is $10,000 and the number of years purchased is 3, then goodwill = $10,000 x 3 = $30,000.
  • Trick: Always consider consistent profits over the years to calculate the average profit for goodwill.

Revaluation of Assets and Reassessment of Liabilities

Upon the admission of a new partner, the firm’s assets and liabilities are revalued to incorporate current market values.

Important Note: Only the change in value (increase or decrease) is recorded in the Revaluation Account.

Adjustment Regarding Capitals

The capital accounts of old partners are adjusted in accordance with the agreement, usually in the new profit-sharing ratio. If necessary, partners may need to bring in additional capital or withdraw some amount.

Example: If A’s capital is $10,000, and after adjustment in the new ratio, it should be $12,000, A will bring in an additional $2,000.

Preparation of New Partner’s Capital Account

The new partner brings in capital as per agreement. They may also bring in their share of goodwill.

TS Grewal Class 12 Volume 2 pdf 2023-24

TS Grewal’s Accountancy book is a popular textbook used by students in Class 12th studying Commerce stream. It is known for its clear and concise explanations of accounting principles and practices. As previously mentioned, using TS Grewal Class 12 Solutions can make your studies more effective and productive. In order to make your studies more convenient and productive for you, we have presented you with Admission of a Partner Class 12 TS Grewal solutions PDF for free.

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Conclusion

In conclusion, this was your admission of a partner class 12 ts grewal solutions. The admission of a partner in a firm demands systematic accounting treatments to ensure that the interests of all partners are protected. The concepts of new profit-sharing ratio, goodwill, revaluation, and capital adjustments form the crux of this process. By understanding and applying these concepts, one can easily navigate the complexities of partnership account adjustments. If you have found our solutions helpful, then make sure share with your friends.

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