Alpha and Beta are in partnership. They share profits equally after Alpha has been allowed a salary of $4,000 pa. No interest is charged on drawings or allowed on current accounts or capital accounts. The trial balance of the partnership at 31 December 20X8 before adjusting for any of the items below, is as follows: Capital Current - Drawings Sales Inventory 1 Jan 20X8 Purchases Operating expenses Loan Land and buildings Alpha Beta Alpha Beta Alpha Betal Dr Cr S000 S000 30 25 3 45 4 200 30 ཧེུརྩ 103 64 Beta (10%) 10 Gamma (10%) 20 670 60 Plant and machinery cost 70 depreciation to 31 December 20X8 Receivables 40 40 Payables Bank 40 40 33 11 376 376 (i) Closing inventory on hand at 31 December was $24,000. (ii) On 31 December Alpha and Beta agree to take their manager, Gamma, into partnership. Gamma's loan account balance is to be transferred to a capital account as at 31 December. It is agreed that in future Alpha, Beta and Gamma will all share profits equally. Alpha will be allowed a salary of $4,000 as before, and Gamma will be allowed a salary of $5,000 pa (half of what he received in 20X8 as manager, included in operating expenses). The three partners agree that the goodwill of the business at 31 December should be valued at $12,000, but is not to be recorded in the books. It is also agreed that land and buildings are to be revalued to a figure of $84,000 and that this revalued figure is to be retained and recorded in the accounts. (iii) Interest on the loan has not been paid. (iv) Included in sales are two items sold on 'sale or return' for $3,000 each. Each item had cost the business $1,000. One of these items was in fact returned on 4 January 20X9 and the other one was formally accepted by the customer on 6 January 20X9.
Alpha and Beta are in partnership. They share profits equally after Alpha has been allowed a salary of $4,000 pa. No interest is charged on drawings or allowed on current accounts or capital accounts. The trial balance of the partnership at 31 December 20X8 before adjusting for any of the items below, is as follows: Capital Current - Drawings Sales Inventory 1 Jan 20X8 Purchases Operating expenses Loan Land and buildings Alpha Beta Alpha Beta Alpha Betal Dr Cr S000 S000 30 25 3 45 4 200 30 ཧེུརྩ 103 64 Beta (10%) 10 Gamma (10%) 20 670 60 Plant and machinery cost 70 depreciation to 31 December 20X8 Receivables 40 40 Payables Bank 40 40 33 11 376 376 (i) Closing inventory on hand at 31 December was $24,000. (ii) On 31 December Alpha and Beta agree to take their manager, Gamma, into partnership. Gamma's loan account balance is to be transferred to a capital account as at 31 December. It is agreed that in future Alpha, Beta and Gamma will all share profits equally. Alpha will be allowed a salary of $4,000 as before, and Gamma will be allowed a salary of $5,000 pa (half of what he received in 20X8 as manager, included in operating expenses). The three partners agree that the goodwill of the business at 31 December should be valued at $12,000, but is not to be recorded in the books. It is also agreed that land and buildings are to be revalued to a figure of $84,000 and that this revalued figure is to be retained and recorded in the accounts. (iii) Interest on the loan has not been paid. (iv) Included in sales are two items sold on 'sale or return' for $3,000 each. Each item had cost the business $1,000. One of these items was in fact returned on 4 January 20X9 and the other one was formally accepted by the customer on 6 January 20X9.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:You are required:
(a) To submit with appropriately labelled headings and subheadings:
(i)
(ii)
(iii)
Partners' capital accounts in columnar form
Partners' current accounts in columnar form
Income statement and appropriation account for 20X8
Transcribed Image Text:19
ALPHA AND BETA
Alpha and Beta are in partnership. They share profits equally after Alpha has been allowed a
salary of $4,000
capital accounts. The trial balance of the partnership at 31 December 20X8 before adjusting
for any of the items below, is as follows:
pa. No interest is charged on drawings or allowed on current accounts or
Dr
Cr
So00
So00
Capital
Alpha
Beta
30
25
Current
Alpha
Beta
3
Drawings
Alpha
Beta
4
5.
Sales
200
Inventory 1 Jan 20X8
30
Purchases
103
Operating expenses
64
Loan
Beta (10%)
Gamma (10%)
10
20
Land and buildings
60
Plant and machinery
cost
70
depreciation to
31 December 20X8
40
Receivables
40
Payables
33
Bank
11
-
376
376
(i)
Closing inventory on hand at 31 December was S24,000.
On 31 December Alpha and Beta agree to take their manager, Gamma, into
(ii)
partnership. Gamma's loan account balance is to be transferred to a capital account as
at 31 December. It is agreed that in future Alpha, Beta and Gamma will all share
profits equally. Alpha will be allowed a salary of $4,000 as before, and Gamma will
be allowed a salary of $5,000 pa (half of what he received in 20X8 as manager,
included in operating expenses).
The three partners agree that the goodwill of the business at 31 December should be
valued at $12,000, but is not to be recorded in the books. It is also agreed that land
and buildings are to be revalued to a figure of $84,000 and that this revalued figure is
to be retained and recorded in the accounts.
(iii)
Interest on the loan has not been paid.
Included in sales are two items sold on 'sale or return' for $3,000 cach. Each item had
(iv)
cost the business $1,000. One of these items was in fact returned on 4 January 20X9
and the other one was formally accepted by the customer on 6 January 20X9.
I
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Step 1: Calculate the gaining or sacrifice ratio
VIEWStep 2: Calculate sacrifice of share in goodwill
VIEWStep 3: Prepare a Revaluation account
VIEWStep 4: Prepare a trading account
VIEWStep 5: Prepare an income statement or profit and loss account
VIEWStep 6: Prepare profit and loss appropriation account
VIEWStep 7: Prepare the partner’s capital account
VIEWStep 8: Prepare Partner’s Current Account
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