ASSIGNMENT TWO Amon,Bernard and Charles are in partnership sharing profits and losses in the ratio 3:2:1 respectively.The balance sheet for the partnership as at 30 June 2016 is as follows: K K Fixed Assets Premises 90,000 Plant 37,000 Vehicles 15,000 Fixtures 2,000__ 144,000 Current Assets Stock 62,379 Debtors 34,980 Cash 760 98,119 242,119 Capital Amon 85,000 Bernard 65,000 Charles 35,000 185,000 Current Accounts Amon 3,714 Bernard (2,509) Charles 4,678 5,883 Loan: Charles 28,000 Current Liabilities Creditors 19,036 Bank Overdraft 4,200 242,119 Charles decides to retire from the business on 30th June 2016 and David is admitted as a partner on that date.The following matters are agreed: (a) Certain assets were revalued - Premises K120,000 - Plant K35,000 - Stock K54,179 (b) Provision for doubtful debts K3,000. (c ) Goodwill is to be recorded in the books on the day Charles retires in the sum of K42,000.The partners in the new firm do not wish to maintain a Goodwill account. (d) Amon and Bernard are to share profits in the same ratio as before and David is to have the same share of profits as Benard (e) Charles is to take his car at its book value of K3, 900 in part payment and the balance of all he is owed by the firm in cash except K20, 000 which he is willing to leave as a loan account. (f) The partners in the new firm are to start on an equal footing so far as capital and current accounts are concerned David is to contribute cash to bring his capital and current accounts to the same amount as the original partner from the old firm who has the lowest investment in the business. The original partner in the old firm who has the higher investment will draw out cash so that his capital and current account balances equal those of his new partners. REQUIRED (a) Account for the above transactions (5 Marks) (b) Draft a Balance Sheet for the new partnership (10 Marks) (c) Calculate and interpret the necessary ratios (10 Marks)