Ansie, Basjan and Chris were in a partnership and distributed the profits 3:1:1 respectively. No goodwill appeared in the books. Danie was accepted as a partner on 1 July 20.0, with the following requirements: Goodwill is valued at N$20 000 only for the purposes of Danies’ admission. Danie must contribute N$21 500 in cash to the partnership. Profits and losses will be distributed in the ratio 4:4:1:1 respectively. No interest on capital or salaries will be applicable. The general reserve must be written back and appear again after admission in the books. The statement of financial position on 30 June 20.1 as follow: STATEMENT OF THE FINANCIAL POSITION ON 30 JUNE 20.1 N$ N$ Capital: Ansie 16 000 Basjan 16 000 Chris 9 400 Danie 7 800 General Reserves 15 000 64 200 Non-current assets Land and Buildings 16 000 Furniture 3 600 Vehicles 2 000 21 600 Current Assets Inventories 14 000 Debtors 12 000 Loan: Ansie 15 000 Bank 6 000 Current Liabilities: Creditors 4 400 42 600 64 200 The profit for the year ending 30 June 20.1 is N$10 000. Drawings for the year ending on June 20.1 are as follow: N$ Ansie 2 000 Basjan 2 000 Chris 1 600 Danie 11 200 With the exception of the drawings and the contribution of Danie, no cash was contributed or withdrawn by the partners. Profit shares and drawings were directly recorded in the capital accounts. After the above statement of financial position was prepared, it was decided that the original agreement was unfair and the partners decided on the following amended agreements: The agreement will be applicable from 1 July 20.0. Land and buildings should be re-valued at N$ 5 000 more than the carrying amount. This is only for admission purposes. Goodwill should be valued at N$ 10 000 only for the admittance of Danie. Chris and Danie’s capital accounts should be each credited with a salary of N$ 2 000 per year from 1 July 20.0 Profits and losses would be shared 2:1:1:1 respectively. Danie must still contribute N$ 21 500. The general reserve must be written back and appear again after admission in the books. The distribution of profits and drawings should be allocated to the capital accounts. The general reserve should be kept in the books at all times. REQUIRED: Determine the balances of the capital accounts on 1 July 20.0. Reconstruct the capital account for the year ended on 30 June 20.1 according to the original agreement. Compile the capital accounts for the year ended 30 June 20.1 according to the new partnership agreement.
Ansie, Basjan and Chris were in a partnership and distributed the profits 3:1:1 respectively. No
Danie was accepted as a partner on 1 July 20.0, with the following requirements:
- Goodwill is valued at N$20 000 only for the purposes of Danies’ admission.
- Danie must contribute N$21 500 in cash to the partnership.
Profits and losses will be distributed in the ratio 4:4:1:1 respectively.- No interest on capital or salaries will be applicable.
- The general reserve must be written back and appear again after admission in the books.
The
STATEMENT OF THE FINANCIAL POSITION ON 30 JUNE 20.1
|
|
N$ |
N$ |
|
Capital: Ansie |
|
16 000 |
|
Basjan |
|
16 000 |
|
Chris |
|
9 400 |
|
Danie |
|
7 800 |
|
General Reserves |
|
15 000 |
|
|
|
64 200 |
|
|
|
|
|
Non-current assets |
|
|
|
Land and Buildings |
16 000 |
|
|
Furniture |
3 600 |
|
|
Vehicles |
2 000 |
21 600 |
|
Current Assets |
|
|
|
Inventories |
14 000 |
|
|
Debtors
|
12 000 |
|
|
Loan: Ansie |
15 000 |
|
|
Bank |
6 000 |
|
|
Current Liabilities: |
|
|
|
Creditors |
4 400 |
42 600 |
|
|
|
64 200 |
The profit for the year ending 30 June 20.1 is N$10 000. Drawings for the year ending on June 20.1 are as follow:
N$
Ansie 2 000
Basjan 2 000
Chris 1 600
Danie 11 200
With the exception of the drawings and the contribution of Danie, no cash was contributed or withdrawn by the partners. Profit shares and drawings were directly recorded in the capital accounts.
After the above statement of financial position was prepared, it was decided that the original agreement was unfair and the partners decided on the following amended agreements:
- The agreement will be applicable from 1 July 20.0.
- Land and buildings should be re-valued at N$ 5 000 more than the carrying amount. This is only for admission purposes.
- Goodwill should be valued at N$ 10 000 only for the admittance of Danie.
- Chris and Danie’s capital accounts should be each credited with a salary of N$ 2 000 per year from 1 July 20.0
- Profits and losses would be shared 2:1:1:1 respectively.
- Danie must still contribute N$ 21 500.
- The general reserve must be written back and appear again after admission in the books.
The distribution of profits and drawings should be allocated to the capital accounts. The general reserve should be kept in the books at all times.
REQUIRED:
- Determine the balances of the capital accounts on 1 July 20.0. Reconstruct the capital account for the year ended on 30 June 20.1 according to the original agreement.
Compile the capital accounts for the year ended 30 June 20.1 according to the new partnership agreement.
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