X and Y are partners sharing profits and losses in the ratio of 3 : 2. On 30th September, 2014 they admitted Z as a partner. The new profit sharing ratio agreed was 2:2: 1. At the time of admission 2 brought in a fixture valued at 76,000 and a machinery worth $ 24,000. No accounting entry was passed for the fixture brought in by partner Z in the books of the firm. Also at the time of admission the valuation of goodwill was made. The value of goodwill of X and Y was decided at $ 40,000 and value of goodwill of partner Z was fixed at $ 20,000. No effect was given to the goodwill value in the books of the firm. On 31-3-2015, it was decided that partner X would retire and the other partners viz., Y and Z would continue the business of the firm by converting it into a company called YZ Ltd., with equal shareholding in the company The partners agreed as below: (1) The goodwill of the firm shall be fixed at $ 80,000. Necessary effect for goodwill value not recorded earlier shall be given. The present goodwill value being $ 80,000 shall be reflected in the books of the company (II) All the assets and liabilities of the firm shall be taken over by the company. Partner X would take motor car of the firm at a value of $ 7,400. (IV) (V) A plant owned by the firm is sold for $ 6,000. The profit of the firm upto 30-9-2014 was $ 44,000. (VI) Partner X agreed to leave $ 90,000 as loan with the firm in return for 12% interest per annum. Following is the Trial Balance of the firm as on 31-3-2015 : Dr. Particulars Capital Account : 80,000 50,000 24,000 Y Drawings Account : 24,000 20,000 9,600 70,000 Y Sundry Debtors Sundry Creditors Plant (Book value of plant sold $ 8,000) Fixtures 32,000 46,000 14,000 Stock 24,000 5,400 34,600 Motor Car Cash at Bank Profit & Loss A/e (for the year) 59,600 2,45,600 2,45,600 You are required to prepare : (i) Goodwill Adjustment Account. (ii) Profit & Loss Appropriation Account
X and Y are partners sharing profits and losses in the ratio of 3 : 2. On 30th September, 2014 they admitted Z as a partner. The new profit sharing ratio agreed was 2:2: 1. At the time of admission 2 brought in a fixture valued at 76,000 and a machinery worth $ 24,000. No accounting entry was passed for the fixture brought in by partner Z in the books of the firm. Also at the time of admission the valuation of goodwill was made. The value of goodwill of X and Y was decided at $ 40,000 and value of goodwill of partner Z was fixed at $ 20,000. No effect was given to the goodwill value in the books of the firm. On 31-3-2015, it was decided that partner X would retire and the other partners viz., Y and Z would continue the business of the firm by converting it into a company called YZ Ltd., with equal shareholding in the company The partners agreed as below: (1) The goodwill of the firm shall be fixed at $ 80,000. Necessary effect for goodwill value not recorded earlier shall be given. The present goodwill value being $ 80,000 shall be reflected in the books of the company (II) All the assets and liabilities of the firm shall be taken over by the company. Partner X would take motor car of the firm at a value of $ 7,400. (IV) (V) A plant owned by the firm is sold for $ 6,000. The profit of the firm upto 30-9-2014 was $ 44,000. (VI) Partner X agreed to leave $ 90,000 as loan with the firm in return for 12% interest per annum. Following is the Trial Balance of the firm as on 31-3-2015 : Dr. Particulars Capital Account : 80,000 50,000 24,000 Y Drawings Account : 24,000 20,000 9,600 70,000 Y Sundry Debtors Sundry Creditors Plant (Book value of plant sold $ 8,000) Fixtures 32,000 46,000 14,000 Stock 24,000 5,400 34,600 Motor Car Cash at Bank Profit & Loss A/e (for the year) 59,600 2,45,600 2,45,600 You are required to prepare : (i) Goodwill Adjustment Account. (ii) Profit & Loss Appropriation Account
SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter14: Partnerships And Limited Liability Entities
Section: Chapter Questions
Problem 14P
Related questions
Concept explainers
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
Question
Transcribed Image Text:X and Y are partners sharing profits and losses in the ratio of 3:2. On 30th September, 2014 they
admitted Z as a partner. The new profit sharing ratio agreed was 2:2: 1.
At the time of admission 2 brought in a fixture valued at 76,000 and a machinery worth $ 24,000. No
accounting entry was passed for the fixture brought in by partner Z in the books of the firm.
Also at the time of admission the valuation of goodwill was made. The value of goodwill of X and Y was
decided at $ 40,000 and value of goodwill of partner Z was fixed at $ 20,000. No effect was given to the
goodwill value in the books of the firm.
On 31-3-2015, it was decided that partner X would retire and the other partners viz., Y and Z would
continue the business of the firm by converting it into a company called YZ Ltd., with equal shareholding
in the company
The partners agreed as below:
(1)
The goodwill of the firm shall be fixed at $ 80,000. Necessary effect for goodwill value not
recorded earlier shall be given. The present goodwill value being $ 80,000 shall be reflected
in the books of the company
All the assets and liabilities of the firm shall be taken over by the company.
(II)
(III)
Partner X would take motor car of the firm at a value of $ 7,400.
(IV)
(V)
A plant owned by the firm is sold for $ 6,000.
The profit of the firm upto 30-9-2014 was $ 44,000.
(VI)
Partner X agreed to leave $ 90,000 as loan with the firm in return for 12% interest per
annum.
Following is the Trial Balance of the firm as on 31-3-2015:
Dr.
Particulars
Capital Account:
80,000
50,000
Y
24,000
Drawings Account:
24,000
20,000
-9,600
70,000
Y
Sundry Debtors
Sundry Creditors
Plant (Book value of plant sold $ 8,000)
Fixtures
Stock
32,000
46,000
14,000
24,000
Motor Car
5,400
34,600
Cash at Bank
Profit & Loss A/e (for the year)
59,600
2,45,600
2,45,600
You are required to prepare : (i) Goodwill Adjustment Account. (ii) Profit & Loss Appropriation
Account
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Financial Accounting
Accounting
ISBN:
9781305088436
Author:
Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:
Cengage Learning
Financial Accounting
Accounting
ISBN:
9781337272124
Author:
Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:
Cengage Learning
Financial Accounting
Accounting
ISBN:
9781305088436
Author:
Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:
Cengage Learning
Financial Accounting
Accounting
ISBN:
9781337272124
Author:
Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:
Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College