Rice and Flower were partners sharing profit and loss equally. Statement of Financial Position as at 31 December 2020....

Transcribed Image Text:

Rice and Flower were partners sharing profit and loss equally. Statement of Financial Position as at 31 December 2020. Non current Assets Premises Machinery Vehicles Fittings Current Assets Inventory Account receivables Cash Partners Equity Capital - Rice Current Account - Rice Capital Flower Current - Flower Current Liabilities Account payables Bank overdraft 9800 12640 60 36000 2600 36000 1800 9850 1250 35000 20000 4000 6000 65000 22500 87500 38600 37800 11100 87500 On 1 January 2021 the partners agreed to admit Peach as a partner under the following conditions: a) A goodwill account to be created at $16000 and to be a amortise (written off) over the first 4 years of the new partnership (similar to straight line method of depreciation. b) Premises to be revalue at $45000 and Fittings at $8000. c) Peach is to introduced $20000 as capital, part of which was used on 1 January to purchase a new motor vehicle for $8000 and additional stock for $4000. d) Profits and losses are to be shared in proportion to the Capital account. e) Interest on capital is at 12% p.a. and interest on drawing is to be charged at a flat rate of 15% on the total amount drawn by each partner. f) Peach is to receive salary of $5000 p.a. During the year ended 31 December 2021 the partners drawings were: Rice - $4200 Flower - $5000 Peach - $2800 The net income (before writing of the goodwill and allowing the salary of Peach) for the year ended 31 December 2021 was $33600. The capital accounts remains unchanged from 1 January 2021 to 31 December 2021. Required: a) Prepare the statement of financial position as at 1 January 2021. b) Prepare the appropriation of Income statement for the year ended 31 December 2021.

Answer rating: 100% (QA)

a Rice Flower Peach Statement of financial position as at 1st January 2021 Non curr View the full answer