İLLUSTRATION 3. A, B and C were partners in a business, sharing profits and losses in the ratio of 2:1:1. Their Balance Sheet as at 31-3-2015 is as follows : BALANCE SHEET as at 31-3-2015 (Figures in '000) Liabilities Assets Fixed Capital : А Fixed Assets 300 200 Investments 50 B C 100 Current Assets : Stock Debtors Cash & Bank 100 100 60 150 400 Current Accounts : A B 40 20 310 60 200 Unsecured Loans 660 660 On 1-4-2015, it is agreed among the partners that BC (P) Ltd., a newly formed company with B and C having each taken up 100 shares of but excluding cash & bank balances. Following points are also agreed upon : 10 each will take over the firm as a going concern including goodwill (a) The Goodwill will be valued at 3 years purchase of super profit. (b) The actual profit for the purpose of goodwill valuation will be (c) Normal rate of return will be 15% on fixed capital. (d) All other assets and liabilities will be taken over at book values. 1,00,000. (e) The purchase consideration will be payable partly in shares of Payment in cash being to meet the requirement to discharge A, who has agreed to retire. ) B and C are to acquire equal interest in the new company. g) Expenses of liquidation 40,000. You are required to prepare the necessary Ledger Accounts. 10 each and partly in cash.
İLLUSTRATION 3. A, B and C were partners in a business, sharing profits and losses in the ratio of 2:1:1. Their Balance Sheet as at 31-3-2015 is as follows : BALANCE SHEET as at 31-3-2015 (Figures in '000) Liabilities Assets Fixed Capital : А Fixed Assets 300 200 Investments 50 B C 100 Current Assets : Stock Debtors Cash & Bank 100 100 60 150 400 Current Accounts : A B 40 20 310 60 200 Unsecured Loans 660 660 On 1-4-2015, it is agreed among the partners that BC (P) Ltd., a newly formed company with B and C having each taken up 100 shares of but excluding cash & bank balances. Following points are also agreed upon : 10 each will take over the firm as a going concern including goodwill (a) The Goodwill will be valued at 3 years purchase of super profit. (b) The actual profit for the purpose of goodwill valuation will be (c) Normal rate of return will be 15% on fixed capital. (d) All other assets and liabilities will be taken over at book values. 1,00,000. (e) The purchase consideration will be payable partly in shares of Payment in cash being to meet the requirement to discharge A, who has agreed to retire. ) B and C are to acquire equal interest in the new company. g) Expenses of liquidation 40,000. You are required to prepare the necessary Ledger Accounts. 10 each and partly in cash.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
Question
Transcribed Image Text:İLLUSTRATION 3. A, B and C were partners in a business, sharing profits and losses in the ratio of
2:1:1. Their Balance Sheet as at 31-3-2015 is as follows :
BALANCE SHEET
as at 31-3-2015
(Figures in '000)
Liabilities
Assets
Fixed Capital :
А
Fixed Assets
300
200
Investments
50
В
C
100
Current Assets :
Stock
Debtors
Cash & Bank
100
100
60
150
400
Current Accounts :
A
B
40
20
310
60
200
Unsecured Loans
660
660
On 1-4-2015, it is agreed among the partners that BC (P) Ltd., a newly formed company with B and C
having each taken up 100 shares of
but excluding cash & bank balances. Following points are also agreed upon :
10 each will take over the firm as a going concern including goodwill
(a) The Goodwill will be valued at 3 years purchase of super profit.
(b) The actual profit for the purpose of goodwill valuation will be
(c) Normal rate of return will be 15% on fixed capital.
(d) All other assets and liabilities will be taken over at book values.
1,00,000.
(e) The purchase consideration will be payable partly in shares of
Payment in cash being to meet the requirement to discharge A, who has agreed to retire.
) B and C are to acquire equal interest in the new company.
g) Expenses of liquidation 40,000.
You are required to preparc the necessary Ledger Accounts.
10 each and partly in cash.
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