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: 

1. Goodwill is valued at R20 000 only for the purposes of Danie’s admission. 
2. Danie must contribute R21 500 in cash to the partnership. 
3. Profits and losses will be distributed in 4:4:1:1 respectively. 
4. No interest on capital or salaries will be applicable. 
5. 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 

	R	R
Capital: Ansie		16 000
Basjan		16 000
Chris		9 400
Danie		7 800
General Reserves		49 200  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  Loan Ansie	12 000  15 000
Bank	6 000
	47 000
Current Liabilities: Creditors	4 400	42 600
		64 200

 

The profit for the year ending 30 June 20.1 is R10 000. Drawings for the year ending on June 20.1 are as follow: 

Ansie                         R 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With the exception of the drawings and the contribution of Danie, no cash was contributed or withdrawn by the partners.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: 

1. The agreement will be applicable from 1 July 20.0. 
2. Land and buildings should be re-valued at R5 000 more than the carrying amount. 

This is only for admission purposes. 

1. Goodwill should be valued at R10 000 only for the admittance of Danie. 
2. Chris and Danie’s capital accounts should be each credited with a salary of R2 000 per year from 1 July 20.0 
3. Profits and losses would be shared 2:1:1:1 respectively. 
4. Danie must still contribute R21 500. 
5. The general reserve must be written back and appear again 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: 

1. 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. 
2. Compile the capital accounts for the year ended 30 June 20.1 according to the new partnership agreement.     

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