FACULTY OF COMMERCE, MANAGEMENT AND LAW Assignment Questions AFE3691 ASSIGNMENT 1 Question 1-Assignment 1 - 6 marks Da Silva and Ehlers are partners in a Green Hydrogen business named DaEh. They specialise in the consultancies and research services, wherby they advise governments on the African continent. Da Silva and Ehlers share profits and losses in the ratio 3:2 according to their partnership agreement. The following Trial Balance was extracted from the financial records of the partnership 31 December 2017: Capital- Da Silva Capital - Ehlers Current account- Da Silva Current account- Ehlers Bank DR CR 381 000 234 000 90 000 60 000 90 000 Fischer is a specialist in the green energy industry. Due to the prospects of business growth Da Silva and Ehlers decided to admit Fischer as from 01 January 2018 as a partner under the following terms and conditions: Fischer will receive 1/5 of the profits and losses. Da Silva and Ehlers will contribute in the ratio 2:1 towards Fischer's 1/5 profit share. . . Fischer must pay N$ 180 0000 for her 1/5 share in the partnership's assets. The assets of the partnership were re-valued on 01 January 2018 and the revaluation account revealed a surplus of N$ 60 000. The new partnership states inter alia: The partners will not make use of current accounts anymore; therefore all current accounts must be closed off to their capital accounts. The accounting records will not show any good will. Page 10 of 25 FACULTY OF COMMERCE, MANAGEMENT AND LAW You are required to: 1.1 Calculate the new profit sharing ratio after the admission of Fischer. (6 marks) Arthur for the eways-Arthur Drevinge-Busine Deblors Contro mber 2020 Debli/N Crediens 100.000 January 20 4.006 2020) 10000 18-000 5000 Alliance for credit Furniture and equipment at cost depreciations Adve Inton discount received 401 000 4800 6818 500 Page 11 of 25 728 FACULTY OF COMMERCE, MANAGEMENT AND LAW Question 2 Assignment Ubisoft Entertainment is a partnership of exclusive game distributor who specialise in electronic arts and play stations. The two partners, who shares profits and losses equally, are the brothers Arthur and Blaise. The information below pertains to the business activities of the partnership for the year ended 31 December 2020 Ubisoft Entertainment - Trial Balance as at 31 December 2020 Account Debit/N$ Credit/N$ Capital-Arthur Capital - Blaise 100 000 120 000 Current account - Arthur (1 January 2020) 4.000 Current account - Blaise (1 January 2020) 10 000 Drawings Arthur the 18 000 Drawings - Blaise 6 000 Long-term loan - Blaise 80 000 Debtors Control 106 600 Allowance for credit losses (1 January 2020) 4000 Furniture and equipment at cost 70 000 Accumulated depreciation: Furniture and 7 000 Bank Inventory (Merchandise) (1 January 2020) 106 810 161 000 Sales 663 246 Bad debts recovered. Settlement discount received Purchase returns 210 2 900 1 700 Purchases 401 000 Settlement discount granted 4 800 Advertising cost 8 818 Administrative expenses 64 500 Rental expenses 4 000 Stator Interest expense (long-term loan) 3 600 Salaries and wages 25 000 Stationary 1 200 There Insurance yea728 989 056 989 056 Page 12 of 25 FACULTY OF COMMERCE, MANAGEMENT AND LAW Additional information: The following is an extract from the partner agreement and except where it is stated differently, has not yet been taken into account: Interest on capital is calculated at 9% per annum. Interest on current accounts (opening balances) at 7% per annum. Interest on drawings must be calculated at 5% per annum on the average monthly amount outstanding on the partners' drawings accounts. (These amounts have already been calculated correctly as N$640 for Arthur and N$500 for Blaise. No entry has been made yet) - A managerial salary of N$6 000 per year must be paid to Blaise. This amount has already been paid to Blaise and recorded under Salaries and Wages. Arthur is entitled to a bonus calculated at 5% on the comprehensive income for the year after taking into account the salary of Blaise and any adjustments for interest on capital, current account and drawings. An outstanding debt of N$600 is irrecoverable and must be written off. 21 Pre The allowance for credit losses must be adjusted to N$5 300 at year-end. It was agreed that interest on the long-term loan from Blaise would amount to ended. Deg 22 Prepara N$4 800 per annum. Depreciation must be provided for at 15% per annum on furniture and equipment add according to the diminishing-balance method. Merchandise Inventories on hand at 31 December 2020: N$122 000 Stationary N$ 200 There was no opening stationary inventory at the beginning of the year. The following expenses have been prepaid: Insurance Advertising N$ 124 N$ 1 896 Page 13 of 25 FACULTY OF COMMERCE, MANAGEMENT AND LAW Admission of new partner Arthur and Blaise's youngest brother, Claude, recently graduated as a sound engineer and Arthur and Blaise decided to admit Claude as a third partner of Ubisoft Entertainment on 01 January 2021. A revaluation of all assets and liabilities were done. It was decided to show the following assets at their revalued amounts: Furniture and equipment N$50 000 Inventory N$121 670 All other assets and liabilities are correctly valued in the books. Goodwill will not be shown in the new partnership's books. Partners will share profits in the ratio 1:1:1. Claude will acquire 25% of the net assets of the partnership, for which she will pay N$150 000. Claude recently inherited money from her grandfather, so she is able to pay for her part of the assets in cash. You are required to: 2.1 Prepare the statement of profit or loss and other comprehensive income ended 31 December 2020 for Ubisoft Entertainment. (13 marks) for the year 2.2 Prepare the Profit Appropriation account as at 31 December 2020 before Claude was admitted as a partner. (10 marks) 2.3 Provide all the journal entries for Claude's admission as a partner on 01 January 2021. Journal narrations are not required. (15 marks) Page 14 of 25 CamScanner