QUESTION 7 (25 Marks) Eden and Stein were in partnership, sharing profits and losses in the...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
QUESTION 7 (25 Marks) Eden and Stein were in partnership, sharing profits and losses in the ratio 2:1. Their abridged statement of financial position as at 31 March 20x5 was: ASSETS Equipment at carrying value Vehicles at carrying value Inventory Accounts receivable Bank 5,600 EQUITY & LIABILITIES Capital: E Eden S Stein 1,400 3,500 Current accounts: E Eden S Stein 6,500 1,500 18.500 Long-term borrowings Accounts payable • • 5,000 4,000 2,000 The partnership was sold to Diamond Ltd as a going concern. The company was incorporated with a registered capital of 20,000 ordinary shares of N$1 each. The partnership paid N$450 and Diamond Ltd N$1000 for expenses for the transfer. The agreement was as follows: (1,000) 3,000 5,500 18.500 1. Eden would take over one vehicle at book value, that is, N$800, and Stein would take over the other vehicle at N$1,100. 2. Diamond Ltd would take over all assets and liabilities with the exception of bank and vehicles. 3. The assets were taken over at these valuation amounts: N$4,800 N$5,000 N$3,500 Goodwill Equipment Inventory at carrying value Accounts receivable at carrying value less an allowance for bad debts at 10%. 4. Diamond Ltd upon taking transfer would immediately pay off the loan. 5. Diamond Ltd would pay N$1650 in cash and the rest in shares. The shares were divided between Eden and Stein in the profit-sharing ratio. 6. The available cash would be divided between Eden and Stein in the profit-sharing ratio. The shares would between Eden and Stein in order to clear the outstanding capital accounts to nil. YOU ARE REQUIRED TO: 1. Draw up the realization account to show the necessary entries pertaining to the sale of the partnership. (10 marks) 2. Draw up the capital accounts of the partners (in columnar form) in the general ledger. (15 marks) Admission of new partner Arthur and Blaise's youngest brother, Claude, recently graduated as Arthur and Blaise decided to admit Claude as a third partner of Ubiso January 2021. A revaluation of all assets and liabilities were done. It wa 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 partner pay N$150 000. Claude recently inherited money from her grand 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 inc ended 31 December 2020 for Ubisoft Entertainment. (13 ma 2.2 Prepare the Profit Appropriation account as at 31 December 201 admitted as a partner. (10 marks 2.3 Provide all the journal entries for Claude's admission as a partne Journal narrations are not required. (15 marks QUESTION 7 (25 Marks) Eden and Stein were in partnership, sharing profits and losses in the ratio 2:1. Their abridged statement of financial position as at 31 March 20x5 was: ASSETS Equipment at carrying value Vehicles at carrying value Inventory Accounts receivable Bank 5,600 EQUITY & LIABILITIES Capital: E Eden S Stein 1,400 3,500 Current accounts: E Eden S Stein 6,500 1,500 18.500 Long-term borrowings Accounts payable • • 5,000 4,000 2,000 The partnership was sold to Diamond Ltd as a going concern. The company was incorporated with a registered capital of 20,000 ordinary shares of N$1 each. The partnership paid N$450 and Diamond Ltd N$1000 for expenses for the transfer. The agreement was as follows: (1,000) 3,000 5,500 18.500 1. Eden would take over one vehicle at book value, that is, N$800, and Stein would take over the other vehicle at N$1,100. 2. Diamond Ltd would take over all assets and liabilities with the exception of bank and vehicles. 3. The assets were taken over at these valuation amounts: N$4,800 N$5,000 N$3,500 Goodwill Equipment Inventory at carrying value Accounts receivable at carrying value less an allowance for bad debts at 10%. 4. Diamond Ltd upon taking transfer would immediately pay off the loan. 5. Diamond Ltd would pay N$1650 in cash and the rest in shares. The shares were divided between Eden and Stein in the profit-sharing ratio. 6. The available cash would be divided between Eden and Stein in the profit-sharing ratio. The shares would between Eden and Stein in order to clear the outstanding capital accounts to nil. YOU ARE REQUIRED TO: 1. Draw up the realization account to show the necessary entries pertaining to the sale of the partnership. (10 marks) 2. Draw up the capital accounts of the partners (in columnar form) in the general ledger. (15 marks) Admission of new partner Arthur and Blaise's youngest brother, Claude, recently graduated as Arthur and Blaise decided to admit Claude as a third partner of Ubiso January 2021. A revaluation of all assets and liabilities were done. It wa 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 partner pay N$150 000. Claude recently inherited money from her grand 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 inc ended 31 December 2020 for Ubisoft Entertainment. (13 ma 2.2 Prepare the Profit Appropriation account as at 31 December 201 admitted as a partner. (10 marks 2.3 Provide all the journal entries for Claude's admission as a partne Journal narrations are not required. (15 marks
Expert Answer:
Related Book For
Accounting For Cambridge International AS And A Level
ISBN: 9780198399711
1st Edition
Authors: Jacqueline Halls Bryan, Peter Hailstone
Posted Date:
Students also viewed these accounting questions
-
The statement of financial position as at 31 December 20X2 of Zoom Products Ltd included: Trade receivables...............................85,360 The financial statements for the year ended 31...
-
The summarized statements of financial position as at 31 March 20X1 and 31 March 20X2 of Higher Ltd are as follows: Additional information 1. Non-current assets Non-current assets disposed of during...
-
The Statement of Financial Position as at 31 December 2019 for Dinar Bhd is presented below. Equipment Less: Accumulated depreciation Accounts Receivable Less: Allowance for doubtful debts Prepaid...
-
For the year ending December 31, Orion, Inc. mistakenly omitted adjusting entries for $1,500 of supplies that were used, (2) unearned revenue of $4,200 that was earned, and (3) insurance of $5,000...
-
Bob was waiting at the crosswalk for the light to turn green. As he stood there, a car that was stopped in the road next to him suddenly exploded, and Bob was injured by the blast. A defect in the...
-
A manager has decided to use the Hawthorne Studies to improve productivity in an office. How would she accomplish this? Would the results be short- or long-term? Explain.
-
What items of information must be included in a notice of deposition?
-
On January 1, 2010, Point Corporation acquired an 80% interest in Sharp Company for $2,000,000. At that time Sharp Company had capital stock of $1,500,000 and retained earnings of $700,000. The book...
-
You have been hired as an analyst for Mellon Bank and your team is working on an independent assessment of Daffy Duck Food Inc. (DDF Inc.) DDF Inc. is a firm that specializes in the production of...
-
A missile guidance system has five fail-safe components. The probability of each failing is 0.05. Find these probabilities. a. Exactly 2 will fail. b. More than 2 will fail. c. All will fail. d....
-
Using the table below, create SinCo's income statement for 2013 and 2014. (Do not round intermediate estimates. Round your answer to 2 decimal places.) 2013 2014 Revenue $4,000 5252 cost of goods...
-
How does the sending object obtain data from the object that owns the parameter values? (a) By adding an interface to the sending object and adding it to the interaction sequence (b) By adding an...
-
Rational Unified Process-System Engineering (RUP-SE), a version of RUP is tailored by ________ for System Engineering. (a) SPSS (b) History of IBM (c) Rational Software (d) IBM
-
RUP is (a) iterative and incremental (b) use case driven (c) architecture centric (d) None of these (e) All the above
-
The UML is a language for (a) visualizing, specifying, constructing, documenting the artefacts of a software system (b) visualizing, modeling, constructing, documenting the artefacts of a software...
-
Life cycle of a class is represented by (a) collaboration diagram (b) state chart diagram (c) class diagram (d) deployment diagram
-
Read the article given below and identify your key findings from it China's Trade Slows as Demand Drops and Covid-19 Lockdowns Hit Supply Chains The weakest export growth in almost two years reflects...
-
Economic feasibility is an important guideline in designing cost accounting systems. Do you agree? Explain.
-
The following situations have arisen affecting the financial affairs of MOP Ltd. The company's year-end was 31 December 2014. The company's financial statements were authorised by the directors for...
-
Carlos Rodriguez of Venezuela sells goods on consignment to BOT Inc of New York. The following details are available concerning a recent consignment. Prepare the following ledger accounts to record...
-
Alvin runs a music store but does not keep a kill set of accounting records. He marks up his goods by 50 percent All 4Ales are on a credit basis and all takings are banked at the end of the day....
-
Calculate the CGT payable in relation to each of the following disposals, assuming in each case that the annual exemption is fully utilised against other gains, that there are no allowable losses and...
-
In October 2012, Matthew bought a piece of rare porcelain for 10,000. The porcelain was damaged in early 2019 and in February of that year Matthew spent 3,850 on restoration work. In July 2019,...
-
Mick Stone disposed of the following assets during tax year 2023-24: (1) On 19 May 2023, Mick sold a freehold warehouse for 522,000. This warehouse was purchased on 6 August 2011 for 258,000, and was...
Study smarter with the SolutionInn App