A and B were partners sharing profit and losses in the ratio of 3/4 and 1/4 showed the following Balance Sheet at 31 st Dec 2014: BALANCE SHEET as at 31.12.2014 Liabilities $ Assets Creditors 30,000 Cash in Hand 25,000 General Reserve 16,000 Debtors 50,000 Capitals: Less: Provision 5,000 45,000 A 50,000 Bill Receivable 30,000 54,000 1,04,000 Stock 30,000 Fixtures 20,000 1,50,000 1,50,000 They admit C for th share on 1st Jan 2015, on the following terms: 5 (a) C was to introduce $ 40,000 as his capital. (b) C would pay cash for goodwill which would be based on 4 years' purchase of past profits of 5 years. (c) Assets were revalued as under : Fixtures at $ 15,000; Bills Receivables at $ 40,000; Stock at $ 20,000; Debtors at book value less a Provision of 20%. (d) Outside Liabilities were proved at $ 35,000, one Bill for goods purchased having been omitted from books. Profits for the last five years were as under: 2010 20,000 15,000 25,000 2011 2012 2013 10,000 2014 15,000 Prepare Revaluation Account, Partners' Capital Accounts and Balance Sheet after C's admission.

A and B were partners sharing profit and losses in the ratio of 3/4 and 1/4 showed the following Balance Sheet at 31 st Dec 2014: BALANCE SHEET as at 31.12.2014 Liabilities $ Assets Creditors 30,000 Cash in Hand 25,000 General Reserve 16,000 Debtors 50,000 Capitals: Less: Provision 5,000 45,000 A 50,000 Bill Receivable 30,000 54,000 1,04,000 Stock 30,000 Fixtures 20,000 1,50,000 1,50,000 They admit C for th share on 1st Jan 2015, on the following terms: 5 (a) C was to introduce $ 40,000 as his capital. (b) C would pay cash for goodwill which would be based on 4 years' purchase of past profits of 5 years. (c) Assets were revalued as under : Fixtures at $ 15,000; Bills Receivables at $ 40,000; Stock at $ 20,000; Debtors at book value less a Provision of 20%. (d) Outside Liabilities were proved at $ 35,000, one Bill for goods purchased having been omitted from books. Profits for the last five years were as under: 2010 20,000 15,000 25,000 2011 2012 2013 10,000 2014 15,000 Prepare Revaluation Account, Partners' Capital Accounts and Balance Sheet after C's admission.

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Description: A and Bwere partners sharing profit and losses in the ratio of 3/4 and 1/4 showed the followingBalance Sheet at 31 st Dec 2014:BALANCE SHEETas at 31.12.2014Liabilities$AssetsCreditors30,000 Cash in Hand25,000General Reserve16,000 Debtors50,000Capita

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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