Fitch and Wall have been in partnership for many years sharing profits and losses in the ratio
Question:
Fitch and Wall have been in partnership for many years sharing profits and losses in the ratio 5:3 respectively. The following was their statement of financial position as at 31 December 2016:
On 1 January 2017, they decided to admit Home as a partner on the condition that she contributed £12,000 as her capital but that the plant and machinery and inventory should be revalued at £16,800 and £6,100 respectively, with the other assets, excepting goodwill, remaining at their book values.
The goodwill was agreed to be valueless.
You are required to show:
(a) The ledger entries dealing with the above in the following accounts:
(1) Goodwill account, (2) Revaluation accounts, (3) Capital accounts;
(b) The statement of financial position of the partnership immediately after the admission of Home.
Step by Step Answer:
Frank Woods Business Accounting Volume 1
ISBN: 9781292084664
13th Edition
Authors: Alan Sangster, Frank Wood