(a) A and B are partners in a firm sharing profits and losses equally. On 1st...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
(a) A and B are partners in a firm sharing profits and losses equally. On 1st April, 20 20 the balance of their Capital Accounts were A 50,000 and B 40,000. On that date the balances of their Current Accounts were: A 10,000 (credit) and B 3,000 (debit). Interest @ 5% p.a. is to be allowed on the balance of Capital Accounts as on 1.4.2020. B is to get annual salary of 3,000 which had not been withdrawn. Drawings of A and B during the year were 1,000 and 2,000 respectively. The profit for the year ended 31st March, 2021 before charging interest on capital but after charging B's salary was 70,000. It is decided to transfer 10% of divisible profit to a Reserve Account. Prepare Profit & Loss Appropriation Account for the year ended 31st March, 2021 and show Capital and Current Accounts of the Partners for the year. Calculation of goodwill (b) Tina and Rita are partners in a firm. Their capitals are: Tina 6,00,000 and Rita 4,00,000. During the year ended 31st March, 2021 the firm earned a profit of 3,00,000. Assuming that the normal rate of return is 20%, calculate the value of goodwill on the firm: (i) By Capitalization Method; and (ii) By Super Profit Method if the goodwill is valued at 3 years purchase of Super Profit. (a) A and B are partners in a firm sharing profits and losses equally. On 1st April, 20 20 the balance of their Capital Accounts were A 50,000 and B 40,000. On that date the balances of their Current Accounts were: A 10,000 (credit) and B 3,000 (debit). Interest @ 5% p.a. is to be allowed on the balance of Capital Accounts as on 1.4.2020. B is to get annual salary of 3,000 which had not been withdrawn. Drawings of A and B during the year were 1,000 and 2,000 respectively. The profit for the year ended 31st March, 2021 before charging interest on capital but after charging B's salary was 70,000. It is decided to transfer 10% of divisible profit to a Reserve Account. Prepare Profit & Loss Appropriation Account for the year ended 31st March, 2021 and show Capital and Current Accounts of the Partners for the year. Calculation of goodwill (b) Tina and Rita are partners in a firm. Their capitals are: Tina 6,00,000 and Rita 4,00,000. During the year ended 31st March, 2021 the firm earned a profit of 3,00,000. Assuming that the normal rate of return is 20%, calculate the value of goodwill on the firm: (i) By Capitalization Method; and (ii) By Super Profit Method if the goodwill is valued at 3 years purchase of Super Profit.
Expert Answer:
Related Book For
Advanced Financial Accounting
ISBN: 978-0078025624
10th edition
Authors: Theodore E. Christensen, David M. Cottrell, Richard E. Baker
Posted Date:
Students also viewed these accounting questions
-
A, B and C are partners in a firm sharing profits and losses in the ratio of 3:2:1 with a guarantee of minimum profits to C for 15,000. Total profits of the firm for the year ended on December 31,...
-
Maria and Magda are partners in a firm sharing profit and loss in the ratio of 3:2. They admit Leena as a new partner for 1/10 share of profit which is given by Maria and Magda equally, afterwards...
-
A and B are partners in a firm sharing profits and losses in the ratio of 3:1. On 31" December 2020 they admitted C as a partner for % share in the future profits. C was to bring RO 60000 as his...
-
Prove Theorem 9.7.1. Theorem 9.7.1 Principal Axes Theorem for ft3 Let ax2 + by2 + cz2 + 2dxy + 2exz + 2fyz + gx + hy + iz + j = 0 be the equation of a quadric Q, and let xTAx = ax2 + by2 + cz2 + 2dxy...
-
Prairie Park was started on April 1 by C. J. Amaro and associates. The following selected events and transactions occurred during April. Apr. 1 Stockholders invested $50,000 cash in the business in...
-
On January 1, 2014, Frederiksen Inc.s Stockholders Equity category appeared as follows: Preferred stock, $80 par value, 7%, 3,000 shares issued and outstanding...
-
Two parallel disks each of radius \(R\) are facing each other and separated by a distance \(H\). Derive an expression for the view factor between these disks.
-
What are the manager's roles in a career management system? Which role do you think is most difficult for the typical manager? Which is the easiest role? List reasons why managers might resist...
-
Selected current year-end financial statements of Cabot Corporation follow. (All sales were on credit; selected balance sheet amounts at December 31 of the prior year were inventory, $50,900; total...
-
Using the same data set as in Exercise 3 and for house price growth, run several regression models with one, two, three, and four lags of price growth in the right-hand side of the model. Analyze the...
-
Suppose there is a river on which are located several micro breweries, each of which discharges pollutants into the water Suppose somebody invents a new technology for treating this waste stream...
-
This exercise is the same as (What is the present value of 15 payments of $200 each received every 18 months at a discount rate of 9%?) where we used this formula: Present Value = P * [1 - (1+r)^-n]...
-
What position is a company in if they are sharing the business with other competitors?
-
Explain the five important quantities or measures that are important tomortgage loan analytics.
-
Discuss the due diligence process. Give examples and also send the references used.
-
How would you describe and occupation? How would you describe a profession? What are the differences?
-
Consider a bond with a 7% annual coupon and a face value of $1,000. Complete the following table. years to maturity-3-3-6-9-9 yield to maturity-5-7-7-7-9 current price-x-x-x-x-x What is the yield to...
-
Suppose Green Network Energy needs to raise money to finance its new manufacturing facility, but their CFO does not think the company is financially capable of making the periodic interest payments...
-
On January 2, 20X8, Primary Corporation acquired 100 percent of Street Companys outstanding common stock. In exchange for Streets stock, Primary issued bonds payable with a par and fair value of...
-
Partial trial balance data for Mound Corporation, Shadow Company, and the consolidated entity at December 31, 20X7, are as follows: Additional Information 1. Mound Corporation acquired 60 percent...
-
Prem Company acquired 60 percent ownership of Cooper Company's voting shares on January 1, 20X2. During 20X5, Prem purchased inventory for $20,000 and sold the full amount to Cooper Company for...
-
Describe which characteristics of HR metrics and workforce analytics are likely to result in greater return on investment and organizational impact.
-
Why are information security and privacy important considerations in the design, development, and maintenance of an HRIS?
-
List and discuss the major information security and privacy threats to organizations.
Study smarter with the SolutionInn App