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YOU ARE REQUIRED TO: 1. Prepare the entries in the General journal to record the events described for the admission of Simon. 2. Prepare the statement of financial position of the new partnership

YOU ARE REQUIRED TO: 1. Prepare the entries in the General journal to record the events described for the admission of Simon. 2. Prepare the statement of financial position of the new partnership

Principles of Accounting Volume 1
Principles of Accounting Volume 1
19th Edition
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax
Chapter15: Partnership Accounting
Section: Chapter Questions
Problem 1PA: The partnership of Tatum and Brook shares profits and losses in a 60:40 ratio respectively after...
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and Donald would be created. YOU ARE REQUIRED TO: 1. Prepare the entries in the General journal to record the events described for the admission of Simon. 2. Prepare the statement of financial position of the new partnership
Transcribed Image Text:and Donald would be created. YOU ARE REQUIRED TO: 1. Prepare the entries in the General journal to record the events described for the admission of Simon. 2. Prepare the statement of financial position of the new partnership
QUESTION 1 ra. trnt vwasition- Robert and Donald are partner sharing profits and losses in the ratio of 3:2. On 30 June 2018 their abridged statement of financial position was as follows: ASSETS Property Machinery Inventory Accounts receivable Bank EQUITY & LIABILITIES 40 000 Capital: Robert 20 000 24 000 General reserves 18 000 Accounts payable 12 000 50 000 30 000 22 000 Donald 12 000 114 000 114 000 On 1 July 2018, it was agreed to admit Simon into the partnership. He was expected to bring in cash of N$ 20 000, plus an additional amount for goodwill. 1. The partners decided to value goodwill at N$ 24 000, but that goodwill was not to be shown as an asset in the statement of financial position and that no account for goodwill would be open in the ledger. Any adjustment for goodwill therefore had to be made directly on capital accounts. 2. Property was revalued at N$50 000 and inventory at N$22 000. 3. The three partners in the new partnership are to share profits and losses in the ratio: Robert=5; Simon=2 and Donald=1 respectively. Activate 4. Robert and Donald were to change their capital balances to be proportionate to thatetting of Simon in profit -sharing ratio. For this purpose separate loan accounts for Robert
Transcribed Image Text:QUESTION 1 ra. trnt vwasition- Robert and Donald are partner sharing profits and losses in the ratio of 3:2. On 30 June 2018 their abridged statement of financial position was as follows: ASSETS Property Machinery Inventory Accounts receivable Bank EQUITY & LIABILITIES 40 000 Capital: Robert 20 000 24 000 General reserves 18 000 Accounts payable 12 000 50 000 30 000 22 000 Donald 12 000 114 000 114 000 On 1 July 2018, it was agreed to admit Simon into the partnership. He was expected to bring in cash of N$ 20 000, plus an additional amount for goodwill. 1. The partners decided to value goodwill at N$ 24 000, but that goodwill was not to be shown as an asset in the statement of financial position and that no account for goodwill would be open in the ledger. Any adjustment for goodwill therefore had to be made directly on capital accounts. 2. Property was revalued at N$50 000 and inventory at N$22 000. 3. The three partners in the new partnership are to share profits and losses in the ratio: Robert=5; Simon=2 and Donald=1 respectively. Activate 4. Robert and Donald were to change their capital balances to be proportionate to thatetting of Simon in profit -sharing ratio. For this purpose separate loan accounts for Robert
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