Quick answer: In the “Abha and Ritu were partners” problem, Sonal is admitted for a 1/4th share she acquires from Abha and Ritu in a 2:1 ratio, giving a new profit-sharing ratio of 11:7:6. After accounting for goodwill, revaluation adjustments, and capital readjustment, the firm records a net revaluation loss of Rs 17,000, and the newly constituted balance sheet totals Rs 7,16,000, with capital balances of Abha Rs 2,20,000, Ritu Rs 1,40,000, and Sonal Rs 1,20,000, according to the CBSE Class 12 Accountancy Sample Paper answer key.
If you’ve searched for this question, you’re probably staring at a Class 12 Accountancy exam paper wondering where to even begin. This problem shows up across CBSE sample papers and practice sets because it tests nearly every skill needed for the “Admission of a Partner” chapter in one go: new profit-sharing ratios, goodwill adjustment, revaluation accounts, and capital restructuring. Once you understand the logic behind each step, this question becomes far less intimidating.
This guide breaks the problem down piece by piece, using the figures and verified answer key published in the CBSE Sample Papers for Class 12 Accountancy (Paper 7). Treat it as a worked walkthrough you can follow alongside your textbook, not just a set of final numbers to copy.
What Is the “Abha and Ritu” Partnership Question Asking?
Abha and Ritu are partners sharing profits and losses in a 5:3 ratio. Their balance sheet as at 31st March includes typical partnership items: Bills Payable, Creditors, a Workmen Compensation Fund, General Reserve, a Profit and Loss Account balance, and the partners’ capital accounts on the liabilities side. On the assets side, you’ll find Cash, Debtors, Stock, Investments, Furniture, Machinery, and Goodwill.
On 1st April, they admit Sonal for a 1/4th share, which she acquires from Abha and Ritu in a 2:1 ratio. Several adjustments follow: the firm’s goodwill is revalued at Rs 96,000 (and Sonal cannot pay her share in cash), a debtor becomes insolvent, a provision for doubtful debts is created, half the investments are taken over by the old partners, a workmen compensation claim is settled, a month’s salary is outstanding, and Sonal contributes Rs 1,20,000 as capital. Finally, the partners’ capital accounts are readjusted based on the new profit-sharing ratio, with any excess or deficiency moved to current accounts.
That’s a lot happening at once, which is exactly why examiners like this question. It forces you to apply multiple concepts in sequence rather than in isolation.
How Do You Calculate the New Profit-Sharing Ratio?
This is always the first step when a new partner is admitted. Sonal gets a 1/4th share, and she acquires this share from Abha and Ritu in a 2:1 ratio. That means:
- Abha sacrifices (2/3) × (1/4) = 1/6 of her share
- Ritu sacrifices (1/3) × (1/4) = 1/12 of her share
Starting from the old ratio of 5:3 (or 5/8 and 3/8), subtract each partner’s sacrifice:
- Abha’s new share = 5/8 − 1/6 = 15/24 − 4/24 = 11/24
- Ritu’s new share = 3/8 − 1/12 = 9/24 − 2/24 = 7/24
- Sonal’s share = 1/4 = 6/24
New profit-sharing ratio = 11:7:6, and the sacrificing ratio between Abha and Ritu is 2:1, matching the ratio stated in the question.
Why does this matter beyond getting the ratio right? Every goodwill adjustment and capital restructuring step that follows depends on this sacrificing ratio. Get it wrong here, and every subsequent figure will be off.
How Is Goodwill Treated When the New Partner Can’t Pay in Cash?
Goodwill is one of the trickiest parts of partner admission, but the logic is straightforward once you isolate it. The firm’s goodwill is valued at Rs 96,000. Sonal’s share of this goodwill is:
Rs 96,000 × 1/4 = Rs 24,000
Since Sonal can’t bring this amount in cash, it’s adjusted through the partners’ capital accounts instead. Her capital account is debited for Rs 24,000, and this amount is credited to Abha and Ritu in their sacrificing ratio of 2:1:
- Abha receives Rs 16,000
- Ritu receives Rs 8,000
Decision criteria: Choose the capital-account adjustment method (rather than asking Sonal to bring cash) whenever the incoming partner lacks liquid funds but the partnership still needs to compensate the sacrificing partners fairly. This is the standard approach in CBSE Accountancy problems and in real-world partnership admissions where cash flow is tight.
What Adjustments Go Into the Revaluation Account?
The Revaluation Account captures changes in asset and liability values that occur at the time of admission. In this problem, the key adjustments are:
- Bad debts: A customer who owed the firm Rs 2,000 becomes insolvent, and nothing is recovered. This is a loss.
- Provision for doubtful debts: A fresh provision of 5% is created on the remaining debtors after writing off the bad debt. This is also a loss.
- Investments: Half the investments are taken over by Abha and Ritu at book value (no profit or loss on this portion), while the remaining half is revalued higher than book value, producing a gain.
- Outstanding salary: One month’s salary becomes an outstanding liability, representing a loss.
- Workmen Compensation Fund: The actual claim is lower than the existing fund balance, so the surplus is released to the old partners in their old profit-sharing ratio, separate from the Revaluation Account.
According to the verified CBSE answer key, these adjustments produce a net revaluation loss of Rs 17,000, which is shared by Abha and Ritu in their old 5:3 ratio.
Why Readjust Capital Accounts After Admission?
The question specifies that capital accounts should be readjusted based on the new profit-sharing ratio, with any excess or deficiency transferred to current accounts. Here’s why this step exists: once a new partner contributes a capital amount for a known share, that figure can be used to calculate what the total capital of the firm should be.
Sonal contributes Rs 1,20,000 for her 1/4th share. If 1/4 of total capital equals Rs 1,20,000, then total capital for the reconstituted firm is:
Rs 1,20,000 × 4 = Rs 4,80,000
Each partner’s capital is then calculated according to the new ratio of 11:7:6:
- Abha’s capital = Rs 4,80,000 × 11/24 = Rs 2,20,000
- Ritu’s capital = Rs 4,80,000 × 7/24 = Rs 1,40,000
- Sonal’s capital = Rs 4,80,000 × 6/24 = Rs 1,20,000
Choose this capital-adjustment method whenever a question explicitly states that capitals should align with the new profit-sharing ratio. If a partner’s existing capital balance (after all the goodwill and revaluation entries) is higher than this calculated figure, the excess is transferred to their Current Account rather than withdrawn in cash. If it’s lower, the shortfall is similarly recorded as a deficiency.
What Does the Final Balance Sheet Look Like?
Once every adjustment is posted, the newly constituted firm’s balance sheet is prepared with updated figures for debtors (net of bad debts and provisions), investments (split between what’s retained and revalued), capital accounts (readjusted to the new ratio), and any current account balances created during the readjustment.
According to the CBSE Sample Paper Class 12 Accountancy (Paper 7) answer key, the total of the newly constituted balance sheet comes to Rs 7,16,000, with capital balances of Abha at Rs 2,20,000, Ritu at Rs 1,40,000, and Sonal at Rs 1,20,000.
Common Mistakes Students Make on This Question
A few errors show up repeatedly in student solutions:
- Mixing up the sacrificing ratio with the new ratio. The sacrificing ratio (2:1) tells you how Sonal’s share is split between Abha and Ritu for goodwill purposes. It is not the same as the new profit-sharing ratio (11:7:6).
- Running the Workmen Compensation Fund through the Revaluation Account entirely. Only the shortfall or claim amount typically passes through revaluation; any surplus fund balance is distributed directly to old partners.
- Forgetting to write off any existing goodwill in the books before recording the new goodwill valuation, depending on how your textbook or teacher structures the entries.
- Skipping the current account step. If the question specifies capital readjustment based on the new ratio, you cannot leave mismatched capital balances sitting in the Capital Accounts; the difference must move to Current Accounts.
Practice Makes the Method Stick
This question is a strong example of why Class 12 Accountancy rewards method over memorization. Once you internalize the sequence (new ratio, then goodwill, then revaluation, then capital readjustment) you can apply the same four-step process to almost any partner admission problem, regardless of the specific numbers involved.
If you’re preparing for exams, work through this problem again without looking at the figures above. Then compare your Revaluation Account, Capital Accounts, and final Balance Sheet against the verified CBSE answer key figures: a Rs 17,000 revaluation loss, capital balances of Rs 2,20,000, Rs 1,40,000, and Rs 1,20,000, and a balance sheet total of Rs 7,16,000. If your numbers match, you’ve got the method down.
Frequently Asked Questions
What is the new profit-sharing ratio when Sonal is admitted?
The new profit-sharing ratio is 11:7:6 for Abha, Ritu, and Sonal respectively, calculated after Abha sacrifices 1/6 and Ritu sacrifices 1/12 of their original shares.
How much goodwill does Sonal owe, and how is it settled since she can’t pay cash?
Sonal’s share of goodwill is Rs 24,000 (1/4 of the firm’s Rs 96,000 valuation). Since she cannot pay in cash, her capital account is debited for this amount, and Abha and Ritu are credited Rs 16,000 and Rs 8,000 respectively, matching their 2:1 sacrificing ratio.
What is the revaluation loss in this problem, and why does it occur?
The net revaluation loss is Rs 17,000, driven primarily by bad debts, a new provision for doubtful debts, and outstanding salary, partially offset by a gain on revalued investments.
Why are partners’ capital accounts readjusted after Sonal’s admission?
Capitals are readjusted so that each partner’s capital aligns proportionally with their new profit-sharing ratio, using Sonal’s known capital contribution as the basis for calculating total firm capital. Any excess or shortfall is moved to current accounts rather than settled in cash.
What is the final balance sheet total for the newly constituted firm?
The reconstituted balance sheet totals Rs 7,16,000, according to the CBSE Sample Paper Class 12 Accountancy (Paper 7) answer key.
